New report finds buyers routinely underestimate renovation costs while overlooking the potential six-figure added value offered by new build homes
Home buyers choosing a renovation project in the hope of getting better value could face costs of over £170,000 to bring it up to the standard offered by today’s new build homes, research by the Home Builders Federation (HBF) shows.
The report reveals a significant gap between the perceived value of a ‘doer-upper’ and the reality of bringing a ‘project’ property up to modern standards. More than half (56%) of adults surveyed said they wouldn’t expect to budget more than £50,000 to renovate a ‘doer-upper’, while almost a third (29%) expected to spend £25,000 or less.
In reality, HBF estimates that renovating a three-bed semi-detached property to match the energy efficiency, comfort and technology found in today's new build homes could cost around £170,000.
Despite this, just 1% of respondents expected renovation costs to exceed £150,000.
The findings suggest that in focusing on a property’s asking price, many buyers are overlooking the built-in, long-term value offered by today’s new build homes, and failing to fully consider both the price of improvements and longer-term running costs.
While virtually all new builds achieve an A or B EPC rating, less than 5% of older homes achieve the same energy performance rating, meaning the average new home uses around 30% less energy on average. Research carried out with Octopus Energy estimates that this saves the average new build household around £420 a year on their energy bills compared with an EPC D-rated older property, and around £650 a year when compared with less efficient EPC F or G homes more likely of a renovation project.
HBF’s latest report also reinforces the influence of affordability pressures on buying decisions, as 42% of respondents said mortgage affordability limits could force them to buy a property requiring significant renovation work. The figure rose to 54% among 25- to 34-year-olds , underlining the need for a scheme to support first-time buyers as announced by Government over the weekend.
Steve Turner, Executive Director at the Home Builders Federation, said: “Many buyers believe that renovation projects offer greater long-term value, but our research shows that the reality can be very different. The added value of the technology and modern features built in to today’s new homes is easily overlooked, while the cost of upgrading older homes to the same standard can quickly add up.
“Today’s new build homes are designed to include many of the features buyers can spend years and thousands of pounds adding to older properties. From energy-efficient heating that can significantly reduce ongoing running costs to contemporary layouts and specifications, new build buyers can focus on making the home their own from day one rather than spending money and effort on modern upgrades.
“Renovation projects can be rewarding for some homeowners, but it is important buyers are fully informed as looking beyond the asking price and consider the ongoing costs of improving, maintaining and running a home can make a significant difference when assessing long-term value.”
These findings are published in HBF’s Nothing Compares to New report. Part of its Power to Personalise campaign, the report explores consumer perceptions of the ‘new build premium’ and the potential costs of renovating older homes, aiming to reset the debate around the ‘new build premium’ by recognising the value of today’s new build standards, and the potential costs of updating resale homes to match this quality. It calls for increased transparency around renovation and ownership costs, and recognition of the long-term savings of new build homes into mortgage affordability considerations.
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For media enquiries, homeowner case studies or to arrange an interview, contact HBF’s communications team at media@hbf.co.uk