Do Loft Conversions Add Value?

Loft conversions can add around £100,000 to a home's value

Homeowners who favour improving over moving can easily add around £100,000 to the value of their house, according to new findings by Alliance & Leicester Personal Loans.

Research carried out across England and Wales reveals how homeowners who add a dormer loft conversion to their house are likely to be in a win-win situation. It's cheaper than buying a bigger house, they could see the value of the property go through the roof and they could make significant savings compared to a further advance on a mortgage or a personal loan from the 'Big Four'.

Although there are regional price differences, the UK average cost of a dormer loft conversion is around £23,000* and can add £100,000 to the house's value.  

Potential increase in the average value of homes after the addition of a dormer-style loft conversion**

In London, dormer loft conversions to a three-bedroom home cost around £25,000, but could return a whopping potential profit of nearly £146,000*** - if the homeowner went on to sell their property. The average cost of a loft conversion in the North West stands at £22,080. But it could add £97,888 to the value of the home, give homeowners an extra room and go on to yield a profit of more than £75,000. Similarly in the West Midlands , the cost of converting a three-bedroom home to a four-bedroom home is around £22,000 - but could add more than £100,000 to the value of the property.

Savvy-homeowners who opt to make improvements by taking out a competitive Alliance & Leicester Personal Loan could cash in on their investment when they come to sell, due to the increased value of their property. Alliance & Leicester offers loans of between £7,500 and £20,000 at 6.3% typical APR, which can be a much cheaper option than adding it to a mortgage, potentially saving customers more than £15,000 in interest.  

Richard Al-Dabbagh, Alliance & Leicester Senior Personal Loans Manager, said: "Taking out an Alliance and Leicester Personal Loan in order to fund all, or part of a loft conversion, can be a far cheaper option than moving to a larger house to gain an extra bedroom. Carrying out home improvements instead of moving can have amazing results, potentially increasing the value of your existing property and also saving a great deal of money as well.  

"If you are looking to undertake a sizeable home improvement, there will be a massive temptation to simply take out a further advance on your mortgage. But a personal loan could represent a cheaper alternative for those who can afford higher monthly repayments over the shorter term."

Andrew Thompson, General Manager of the Building Cost Information Service (BCIS), said: "With any work on your home it's crucial to make sure it will be beneficial and add value. While a loft conversion may be cheaper than moving, it can be a project that's disruptive to the household. You also need to carefully consider fire risks and redecorating costs. A surveyor can give you professional advice about building regulations, planning permission and whether the improvement will add value."

For those considering applying for a loan, or switching provider, Alliance & Leicester's website, www.alliance-leicester.co.uk , provides access to useful tools including a Loan Calculator, which enables people work out how much they can afford to borrow and how long they wish to spread their repayments for. 

* Data provided by The Building Cost Information Service (BCIS), as part of the Royal Institute of Chartered Surveyors.

** Data provided by Hometrack.

*** Profit figure based on increase in value following the conversion of a £278,019 three-bed home London to a four-bed house valued at £448,821, less the cost of the work estimated at £25,000.