Are you at a point in your life where you could do with some extra space at home? Perhaps your family is growing, your adult kids have moved back home or you need to accommodate an elderly parent? Or maybe you’re simply looking to upgrade and modernise your home. Whatever your reason, the question is, should you renovate your existing home or start from scratch and build on vacant land? This is a very important decision to make and there are pros and cons for both choices.
So before you start knocking down walls and booking in the tradies, take the time to weigh up the pros and cons of each.
If you love where you live, you have great neighbours, your kids are happy at the local school and your local cafe makes the best coffee, it makes sense to stay where you are and renovate (although you could also consider knocking down your home and starting from scratch).
Other pros of renovating
- The chance to add value to your property
If you live in a sought-after suburb, it would be difficult to overcapitalise. This means any quality upgrades to the property will increase its value, so you have the potential to sell for a significant profit once you’re ready to downsize in the future. There are many factors that come into play here, including how much you plan to spend on your renovations, your equity in your home and how the property market is faring when you are ready to sell. It pays to start your project armed with knowledge and the Real Estate Institute of WA (REIWA) suggests that the best way to do that is to have a professional property market appraisal done before you commit to any plans.
- You get to decide what stays & what goes
Are there aspects of your home you love? For instance, do you own an older, character home with decorative high ceilings and beautiful original timber floors? Often it pays to ensure a renovation respects certain original features, especially when there is some historical value. Or perhaps you love the position and functionality of your kitchen, but it just needs to be modernised. You can save a lot of money by considering what can stay.
Okay, so here are the potential cons of renovating to consider.
- It may be more costly than building from scratch
Depending on the extent of the renovations it can actually cost more than starting from scratch when builders have a clean slate to work with. So do your homework carefully, analyse all the costs and always allow extra in the budget for unanticipated costs.
- The cost and hassle of moving out
Turning your home into a construction site can make living in it unbearable, especially if you have children. So for major renovations, most people opt to move out and rent for the duration (or at least the major part) of the work.
- Structural compliances
Whether you are extending or knocking down your house and building on your existing land, you are bound by the original structural compliances, like easements, on your property. Every council has different rules, so make sure you check with your local council before starting. Your builder should be able to help you identify these issues and go through your options with you.
- A blank canvas
A vacant block of land is like a blank canvas, giving you the freedom (within compliance restrictions) to design the ideal home for your family without compromise due to any existing structures. It also allows you to incorporate sustainable passive design principles that make the best use of the aspect of the land for optimal thermal comfort and natural light and lower energy bills down the track.
- Greater longevity
Access to the newest building materials means you can build a home with the structure and integrity to last. In general, new homes are easier to maintain, less susceptible to termites and more energy efficient.
- Access to government building grants
The federal and state government building bonus grants have had a massive impact on land sales in Perth, increasing 289% when the grants were announced in June in response to COVID-19. The building grant may also apply for renovations, but the renovation must be valued at $150k or more to qualify.
- Deciding what to do with your existing home while building
You need somewhere to live while building so you must decide whether to sell and move into a short term rental or rent out your home while renting elsewhere. Either way, it can get complicated and expensive.
- Stamp duty plus other fees associated with moving
You will need to pay stamp duty on the block you purchase as well as the legal fees (unless you decide to knock down and rebuild on your existing land).
- Finding a block of land in a suburb you like
Finding the right block in the right location isn’t necessarily easy, especially with demand for land currently outweighing stock levels.
At the end of the day, the decision you make between renovating and building depends on your current property and your objectives. If you love where you live location-wise and your house would be perfect with just few upgrades, it makes sense to stay where you are and renovate. If you love your location but your house needs major work, you may be better off knocking it down and starting from scratch on your own land. However, if you’re not fussed on your location and/or your block is too small and the renovations you need too extensive and costly, then it would make more sense to buy a block of land and build.
But there is also another option to consider – sell and upgrade to an existing home that better suits your needs. The first place to start is to have your current home appraised. Contact us and we’ll be more than happy to conduct an accurate and current marketplace appraisal and walk you through the various options available to you.