Renovating a home is one of the most effective ways to boost its market value. In 2024, the remodelling cost vs. value report indicated that the average return on the most common home remodelling projects is about 75%.

But how much does a renovation increase home value? This guide explores which renovations offer the best return on investment (ROI) and the factors that influence the overall value increase.

Why Renovating Your Home Can Increase Its Value?

Renovating modernises a property and makes it more attractive to buyers. Homes with high-end upgrades or energy-efficient features sell faster and at higher prices. Energy-efficient home improvements, like double glazing or insulation, can increase property values by up to 14% in the UK.

Key Renovations That Add the Most Value

The following improvements are attractive in the UK as they align with the push for affordable housing and sustainable living:

• Kitchen Upgrades: A kitchen remodel can recover approximately 81% of the initial investment when selling the property.
• Bathroom Remodels: On average, updated bathrooms add 5-10% in value. Adding energy-efficient fixtures or a modern shower setup can appeal to buyers.
• Energy-Efficient Improvements: Eco-friendly upgrades such as solar panels or insulation can increase value by up to 10% while reducing energy bills.
• Extensions and Loft Conversions: Adding more living space can boost your home’s value by 15-20%.
• Curb Appeal: Enhancing the exterior through fresh landscaping or repainting can increase property value by about 5% by creating a positive first impression.

Factors That Influence the Value Increase

The following factors determine how much value a renovation can add to your property:

• Location and Market Trends: The value increase from renovations varies greatly depending on where your property is located. Home improvements can have a larger impact on property value in high-demand areas, such as urban centres or desirable school districts. For example, a loft conversion in London could add up to 20%, while the same upgrade in a rural area may not yield as high a return.
• The Quality of Renovations and Materials Used: Buyers are more likely to pay a premium for homes with top-tier appliances, luxury finishes, or eco-friendly upgrades. Whereas, poor workmanship or low-quality materials can lower your home’s perceived value and even turn potential buyers away.
• The Cost-to-Benefit Ratio of Specific Renovations: Not all renovations are worth the investment. While adding a bedroom or upgrading a kitchen tends to bring significant returns, other projects such as installing a swimming pool or highly customized renovations may not appeal to all buyers, lowering their ROI.
• Timing: Timing your renovation projects with the property market is essential. In a booming market, buyers are often willing to pay more for move-in-ready homes, maximizing your ROI. However, in a slower market, even well-renovated properties do not see a significant value increase. Additionally, current mortgage interest rates play a significant role in buyer decisions, as lower rates can drive demand for well-renovated properties.

Renovation Tips to Maximize Property Value

Maximizing your property’s value requires careful planning and smart investment choices to ensure a strong return. Here are key tips to follow:

• Plan Renovations with Buyer Appeal in Mind: When renovating, think about what future buyers will value. Features such as modern kitchens, energy-efficient upgrades, and updated bathrooms are key selling points. Avoid overly personal or niche designs that may not appeal to a broad market.
• Focus on High-ROI Improvements: Prioritise renovations that yield the highest return on investment (ROI). Kitchen remodels, bathroom upgrades, and energy-efficient additions like insulation or solar panels typically offer the best ROI.
• Consult a Real Estate Agent Before Major Renovations: It is wise to get advice from professionals who understand your local market. A real estate agent or property appraiser can guide you on which renovations will add the most value based on location and current buyer demand so you don’t over-invest.

How to Finance Renovations?

Funding a renovation can be approached in several ways, depending on your financial situation. Consider these options:

• Using Savings or Equity Release: If you have sufficient savings, using them for renovations allows you to avoid debt. Alternatively, if you have built equity in your home, equity release options like a home equity loan can be used to fund larger projects.
• Home Improvement Loans or Secured Loans: Home improvement loans are designed for renovation projects and can offer competitive interest rates. Secured loans, for example, using your home as collateral, provide access to larger sums, but failure to repay could put your home at risk.
• Mortgage Refinancing Options: Refinancing your mortgage to release equity is another option. This way, you can access funds for renovations at a lower interest rate compared to personal loans. This extends your mortgage term or increases monthly payments.

Conclusion

Renovating your home can greatly increase its value, especially when you focus on high-ROI projects such as kitchen and bathroom upgrades, energy-efficient improvements, and added living space. On average, a well-executed renovation can add 10-20% to your property value.