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BLOG: An Englishman’s home may be his castle, but it’s also his best asset

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26/02/2014
Many homeowners make the mistake of resting on their laurels once they have bought their property, rather than investing to make it better, writes Nick Sanderson.
BLOG: An Englishman’s home may be his castle, but it’s also his best asset

It has often been said that an Englishman’s home is his castle and, as a nation, the desire to own our property outright appears to be something that has been passed down through the generations.

With 64% of the population owning their own home, this ambition seems to show no signs of fading.

However, the mistake that many of today’s homeowners make is to rest on their laurels once they have secured their property, rather than investing to make their property even better. With the average house price now at a staggering £250,000, and only just below the 3% stamp duty threshold, now is the time to invest financially and develop your best asset.

The UK is facing a very real housing shortage and as properties become available on the market, they are often snapped up within a matter of weeks. The key with properties is to look at the financial returns that investment into the foundations of bricks and mortar can make. Often the rewards will be significantly greater than the investment and homeowners need to plan to secure their own financial futures, with housing forming an important part of many retirement plans.

Homeowners should look to the skies if they want to spot the real value in their properties, as a loft conversion is one of the best ways to secure a return on your investment.

Research from Halifax shows that the return can be as much as £20,876 with a cost of about £10,000, whilst GE Money’s survey of estate agents found that a loft conversion adds an average of 12.5% to the selling price. Adding space and light are key to improving your property and even something as basic as new windows can add as much as £5,265 to your house.

Additionally, invest in transforming the empty garage into either another room or demolish it for extra garden space. A report from Santander found that over half of homes that are owned have a garage, which equates to 9.3 million private garages in Britain. By developing this unused building, the return can be as much as an extra £10,000.

Whilst these investments may seem costly, there may eventually come a time when the family home becomes an empty nest and a burden rather than the dream home, and at that time, the importance of your property in freeing up retirement income cannot be overstated. While there can be an anxiety associated with downsizing, the reality is that larger properties are often unsuitable as people get older, expensive to run and increasingly difficult to manage.

There are also more and more desirable options for older people looking to move from their family home. Through careful investment in the long term, as well as short term options such as redecorating, homeowners can realise the full potential of their properties when they decide to sell, and in the process release valuable housing stock, which would go some way to addressing the UK’s housing shortage.

Securing a strong financial return on a property requires an overarching investment plan that should be adapted and modified according to your own financial circumstances. While the state of the market, the economy and interest rates all play a fundamental role in the value of your property, maximising its potential can make all the difference to realising the potential in your strongest asset.

Nick Sanderson is CEO of Audley Retirement Villages

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