I’m planning an extension, but the estimated increase in my property’s value is only 40 per cent of the cost of the work. Is it normal for the uplift in value to be so small on an extension?
You pose an interesting question and, in truth, there are many ways I could try to answer it. I remember attending a valuation lecture in college when the lecturer posed a question: “Is valuation an art or a science?” The answer to the question may trigger some debate, but I believe it is both.
Some methods of valuation involve quantifiable approaches, standardised measurements and formulas, while others require subjective judgment, intuition, market knowledge and assessment. All of this is to say I believe the increase in market value of 40 per cent of the cost of construction, as stated in your query, is only an opinion and not grounded in firm fact.
When valuing a property, many factors must be considered: some relate to the property in question, some to its location and others centre on current market trends. I have not seen the plans for your extension, nor do I know the location of your property, so my response will have to be based on certain assumptions.
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First, I’ll assume that your extension is well thought out and designed with the original house in mind. I recently inspected a property where a single-storey extension (south facing) was recently added to the rear of the property.
This extension added a spacious, modern and bright open-plan kitchen/dining and utility area to the house, but it blocked the flow of natural light through the original house, making the main entrance and reception rooms darker and less appealing to be in. It also magnified the shortcomings of the original area of the house and highlighted the work needed to modernise the entire property.
When considering extending a property, it is always worthwhile to analyse costs versus value uplift. However, given the considerable increases in construction costs recently, perhaps another question should be considered: will the completed property add increased “user value” to your home? Will the finished property provide everything that you and your family want as occupants?
“User value” cannot be quantified, but may well be the key to a functional family home and may result in your family enjoying this property for decades to come. By completing your proposed extension, costly as it may be, it may potentially save you the effort of relocating, not to mention the costs of purchase, professional fees and relocation fees.
I would undertake such a development for what it would add to my home and how it would benefit my family, rather than for how it would increase the property’s value. As a valuer and agent, I have sold many properties, but those properties that provide spacious, comfortable accommodation with natural flow throughout always seem to command more interest from buyers and, in turn, achieve higher sale prices. So, my answer is: if, by extending, you gain the home you desire and enjoy many years of enjoyment then it’s a sound investment.
TJ Cronin is a chartered residential agency surveyor and past president of the Society of Chartered Surveyors Ireland
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