The property market is a really odd one at the moment. Parts of London are doing very well, while many other areas are in the doldrums. And despite Help to Buy it’s still difficult to get a decent deposit together. Harder still, is the fact that in many places there just aren’t enough homes available for sale as we are still selling around 60% of the homes we used to prior to the crash.
With this tough market around us – is it possible to still buy a property and renovate as we used to watch on the Property Ladder programmes with Sarah Beeny?
To make sure you can make money from renovating a property, you need to make sure there is a ‘20%’ margin available.
For example, if you buy a property for £150,000 and then spend £25,000 doing it up, it will need to be worth 20% more than this for the numbers to stack up. So sell for around £210,000. And watch out for issues which stamp duty can cause, such as restrict property price potential. For example, you need to make sure you don’t butt up against property values such as £125,000 or £250,000. If you need your 20% to give a value of £130,000 or £260,000 you aren’t likely to get the uplift as people won’t want to incur a 1% or 3% stamp duty tax too.
However, despite years of Sarah Beeny's Property Ladder instilling a real desire in the UK to buy a wreck and turn it into a beautiful home which you can sell at a profit either now or later on. The problem is that in the current market making a profit out of renovation during a recession is difficult, so it is not a surprise we don’t see many property programmes doing this on our TV’s at the moment.
To get renovating a property right, you will need to:-
And if it’s not your current home or you are classed as a ‘trader’ you’ll have to pay tax on the gains, so it’s not as easy a task to renovate a property for profit.
We have created some really helpful checklists to give you chance of making sure you get them right first time:-
How to carry out a property project
Guide to your maintenance budget
