Top tips from borrowers who have done a unique property renovation27 February 2018
Ecology’s Marketing Manager, Kauser Dad, has been speaking with some of the Society’s borrowers about the challenges they have faced on their renovation projects – from planning and agreeing the alterations to finding a reputable contractor and securing finance. From these conversations it became obvious that planning an extensive retrofit comes with many hurdles and there are some common challenges at certain stages of the project. We’ve pulled together these top tips to help aspiring renovators.
Ensure that you will be able to finance the project from start to finish
If you are planning an unusual or extensive renovation, securing a mortgage may prove more challenging than usual. Perhaps you are thinking about using non-standard materials (which can be either traditional or modern methods of construction) – those updates that make your project unique. Or it could be that the works are extensive and the building is classified as uninhabitable. Be prepared to look around for a specialist renovation mortgage provider – it can be frustrating when your project is not accepted by a lender simply because it sits outside the usual tick-box criteria.
Plan how to finance the renovations – initial considerations
Before works begin, you will need to plan how you will finance the project. The scale of the works may affect whether you are able to live in the property while they are being carried out; if you need to rent or find alternative accommodation during the project, this is likely to further impact your finance needs. If you are going to be using a mortgage to fund your project, the mortgage options that are available to you may be affected by the condition of the property and whether it is habitable; some lenders will be less likely to offer you a mortgage if the property is not considered habitable or if the works are extensive – more about this below.
Research planning permission and other consents
Retrofitting or making major alterations to a property requires some up-front research with regards to the type of planning permissions that you will need to obtain. A lender will likely need to see proof of these permissions. Some things to consider are:
- Do I need planning permission from my local planning authority? Your local authority should be able to advise whether the works you are intending to carry out will require planning approval.
- How can I use my local council’s planning policies to increase the likelihood that I will be granted planning permission? Your local authority may be more inclined to permit works that support sustainable environmental, social or economic development.
- Is my property home to protected species? If legally protected species, like bats or owls, share your property, you will need approval for any works that may cause disturbance.
- Do I need listed building consent? If your property is Grade I or Grade II you will need listed building consent.
- Do the works require building regulation approval? Even if the work is not structural, building regulation approval may be required.
- It may also support your application to include examples of planning permission for extensive renovations previously granted to others in your neighbourhood.
Get at least three quotes
Before approaching a lender, you will need a clear understanding of the anticipated costs of your project. Get at least three quotes from reputable contractors. Ask them:
- Can they provide references or case studies of previous work?
- Are they members of a recognised trade association such as the Federation of Master Builders, National Federation of Builders or TrustMark?
- Do they provide insurance or warranties for work undertaken?
Make sure you understand your contractor’s terms on when payments will be due. Devise and agree a sensible project plan and ensure funds are available during key stages of the renovations. Try and identify any cash flow challenges and address them at the start of the project.
Financing your project as it progresses
If you are considering a renovation mortgage, you may need a minimum deposit to buy the property and further funds (it’s sensible to have about 15-20% of total building cost) to start the work.
Financing the earlier stages of the project – when the property is worth less than its finished potential – can be challenging. For certain renovation projects, the property value can increase when key works have been completed. After these works have been finished and evidenced some lenders allow for the staged release of additional funds. This may be useful if funds are tight. It does mean, however, that re-inspection may be required by a professional valuer or that an interim inspection certificate is required from a building professional, such as an architect or surveyor.
You may also want to borrow an additional amount on your mortgage when the full renovation works are complete – some lenders let you do this if you can show that the value of the property has increased.
What you need to know about uninhabitable properties
If your property is in a poor state of repair or not habitable this could limit the finance options available to you. An estate agent or other building professional can advise whether the property is habitable – this may be determined by whether the kitchen or bathroom amenities are working as they should be.
Mortgage providers don’t have one agreed definition of a habitable property but it can include:
- Watertight – roof in good condition
- Running water and mains electricity
- Functional kitchen and indoor bathroom
A catch-22 often encountered by renovators of uninhabitable properties is that they can’t get a mortgage for the property until they complete some of the works, but they can’t begin the works until they have a mortgage. Some specialist lenders will consider lending for renovations to properties that are not considered habitable, including old and derelict buildings, and may release some funds before you begin work.
Your home may be repossessed if you do not keep up repayments on your mortgage.