How To Renovate

EP68 Does Renovating Make Financial Sense?

• Tash South • Season 1 • Episode 68

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Does Renovating Add Value in 2025? | Home Renovation ROI Explained

Wondering if renovating your home is worth the investment in 2025? In this episode of How To Renovate, I break down down the financial pros and cons of renovating vs. moving, UK renovation trends, return on investment for loft conversions and extensions, and how to budget smartly. Discover when it makes sense to renovate. 

With UK house prices still rising and the cost of moving continuing to soar, more homeowners are choosing to renovate rather than relocate.

In this episode I unpack current renovation trends, typical costs, and what kind of return on investment you can expect from projects like loft conversions and extensions. I also share how you can assess whether a renovation is the right move for you — not just financially, but emotionally and practically too.

Key Talking Points:

UK Renovation Trends (2025) – including stats on rising home improvement loans and the average cost of renovations.

Why Renovating is Often Cheaper Than Moving – breaking down stamp duty, solicitor fees, agent costs, and more.

The Housing Shortage and Design Gaps – why people can't find the "right" house and are choosing to transform their current space instead.

Tailoring Your Home to Your Life – from home gyms to home offices, flexibility matters more than ever.

The Financials: Cost vs Value Add – how to calculate return on investment and avoid overspending.

What Adds the Most Value? – loft conversions, rear extensions, reconfigurations vs. cosmetic upgrades.

When Renovating Doesn’t Make Sense – ceiling prices, financing challenges, and making tough trade-offs.

Beyond the Financials – your home is more than an asset; it’s your sanctuary.

Mentioned in this episode:
Episode 8 – Double the Time & Double the Budget
 Episode 17 – How to Get More Accurate Builder Quotes
Episode 35 – Renovating to Sell
Episode 44 – Understanding and Comparing Contractor Quotes
Episode 48 – No Vanilla Renos, Please
Episode 54 – The Hidden Costs of Renovating

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Hi I'm your host, Tash South I'm an Interior Designer and Renovation Consultant, and I'm here to help you design, renovate and style your home better. Let's create your dream home together.


Each episode of How To Renovate is short, but brimming with practical advice to help you manage your renovation project with confidence and success.

Grab some more renovation advice & free resources and become part of the South Place Studio Renovation Community at
https://www.southplacestudio.com/freebies

Everything I teach about renovation falls within my Five Pillar Process for A Successful Renovation, to learn more about the process, head to
https://www.southplacestudio.com/pillars


Or if you want to get social, you can find us here:

Instagram: @southplacestudio

Linked In: https://www.linkedin.com/company/south-place-studio

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Speaker 1:

Hey there, my fellow renovators. I hope you're well this week. This week I have got a topic that's all about the money. So this week we're talking about does renovating make financial sense? So home improvement here in the UK is definitely on the rise. There are reports of second charge mortgages on homes on the rise. More homeowners are borrowing to renovate their homes or using their savings.

Speaker 1:

Loads of stats are coming out and this is kind of mid 2025, from about mid July up until now. Let me read some of them for you. So it says home improvement loans are increasing. Average home improvement loans are £33,795. Higher in London that comes in at £61,876.

Speaker 1:

And renovations like loft conversions, extensions, are showing really meaningful returns for homeowners. There was a survey of 1,000 homeowners and out of that 1,000, 52% have either renovated in the past year or are planning to renovate in the next year. House prices are rising, renovations are increasing and the average cost of renovating a three-bedroom house here in the UK is coming in at nearly £80,000. So I think, as house prices are rising, people are deciding to, rather than move and pay all that money on the moving expenses, to improve where they are and make it more what they want and make it work for their family rather than moving and perhaps even having to do work there anyway. So I think that's why renovations are increasing here in the UK. People are just deciding rather than spending that money on moving expenses, which can be wasted, they're rather taking that money and investing it in their own homes, perhaps investing in things like planning, getting their planning applications, in getting their architects drawings drawn up so that they can be in a position to take on that renovation in the future. So for many homeowners, I think that staying put and making it better where they are has become far more attractive and cost effective than moving and uprooting.

Speaker 1:

So why is this happening and what's behind this trend? So I thought I'd put together this episode so we can go through it all, and also I'm going to go through quite a few points in this episode just to help you decide whether renovating is the right thing for you to do. And if it makes financial sense, let's get into the episode. So, number one let's cover the continued increase in house prices. So I think this has been a big push towards people renovating more. Moving is becoming increasingly expensive. You have your moving costs, you have all your solicitors and your lawyers fees, stamp duty, taxes. Here in the UK you have agent fees, other legal costs, so it all just adds up to tens of thousands of pounds. And that money sometimes what you would spend on just moving can be enough to do a major renovation on your home.

Speaker 1:

And I think that's why people are deciding rather to try and make where they are a lot better and more functional for them rather than moving. Obviously, there's lots of reasons people do move and will move many, many reasons. So it's not always the solution to renovate, but I think where people are finding that perhaps they would have moved to a bigger home, they are deciding instead, if they can, to make where they are bigger, improve it, make it more functional, make it more energy efficient, because the house price increases year on year, combined with the cost of moving, just, I think, becomes way too much for some people and they just decide to stay where they are and just make it better. And also, what I'm finding when I'm speaking to people who are considering renovating or buying is that they are looking for a long time for the right property for them. And I think people, we have all become more fussy now, haven't we, with all the gorgeous images. We see everywhere pretty much of homes, whether it's on TV, makeover shows, magazines, social media we're all seeing these gorgeous homes all the time. And then I think when we go and look at homes in real life, we're quite disappointed at what's on the market and then also what the cost of that is. And I think, people, there's just this lack of really well designed, beautiful homes out there for people to buy, and so when they start looking, I found they decide that well, if I'm looking for something that I have in my mind as my ideal home and I can't even find anything close to it, I may as well stay where I am and renovate where I am and make it exactly how I want it to be. So I'm finding that a lot as well. When I'm going into people's homes to speak to them about renovating or considering moving, that's coming up quite a lot and, as we all know, moving is one of the most stressful things we can do in our lifetimes and I think if people can avoid it, they do.

Speaker 1:

I've moved around a lot. I don't find it quite as daunting as most people. I've moved countries, I've moved cities. I've moved around in my city many times. I've done loads of renovations so I don't find it as daunting as some people do. But I know that people really really find that hard. They find the uprooting hard. They find the kind of dismantling of their home packing, moving everything they find it really stressful and quite difficult to deal with. So there's that emotional part of it as well. I think that people would like to avoid if they can.

Speaker 1:

And here in the UK the way you buy property is, I well, I think, quite unusual. It's different in other countries. We have chains here so you're linked to a chain. If you're selling a house, the person that's selling your house needs to find a house to buy and all of those. That's called a chain and they all have to complete and everyone has to be in the same place on the same day to complete and the stress of having everyone on the same page and everything lined up, especially if it's a long chain. People find that really difficult and of course that has effects. If that doesn't work out their legal costs, you might be stuck without a house for a certain amount of time, and so I can see why some people just find it all too much, too stressful to move and would rather invest that money into their own homes.

Speaker 1:

And then number two, moving on to the lack of available housing stock. So I think here in the UK the reason the house prices are going up is just there's not so much availability, there's a lack of suitable housing availability. There's a lack of suitable housing. House building here in the UK goes very slowly lots of planning, lots of bureaucracy to get through for houses to be built, and so I think that lack of stock, of suitable stock, is also pushing people to renovate where they are, if they can. You know, it could be about location, layout, the size of the house. Maybe people want to move up to slightly larger house, perhaps their family's growing and, like I mentioned in the previous point, when they decide to start looking at other properties to buy, they're finding that what they really want isn't quite out there a lot of the time, and so they end up perhaps changing their minds, staying where they are. And that's when I kind of get into the conversation with them about renovating where they are to enlarge it, to reconfigure it, to make it more suitable for them and their families.

Speaker 1:

And then, moving on to number three, I think another reason people really would rather renovate is that desire to tailor their home to exactly what they need, which, again, is difficult to find. If you have an idea in your mind of how you want to live and what you want your new home to look like, to be like the different spaces, how you want it to function, function, that's really quite hard to find and I think people are really enjoying the fact that they can make their home exactly as they wanted. With everything now, from working from home, exercising from home, there's so much demand on where we are on our properties, and so I think if people have the option to tailor it, they know what they want. If they need a home office, if they want an area to work out or a home gym, they can plan for that and they can make it exactly as they want. There's just a rising demand for homes that better suit our personal needs and how we have become and how we are starting to live now, and with additions like home offices, loft conversions, extensions, whether to the side or to the rear, and some reconfiguration, people can really do that. Obviously, if they have the home with the potential, you can work around that and they can make and tailor their homes exactly to how they want it to be. So I'm just finding that homeowners are prioritising the comfort, the function and the flexibility and just choosing to invest in what they already have.

Speaker 1:

Okay, so let's get into some more practical points here. So if you're thinking about renovating, you really need to assess if it is the right thing to do for you. You'll obviously need to look at the financial situation. You'll have a few things to consider, like the financing options, how you will get that money to put back into your home. Generally, most people I work with will take out a second charge mortgage, so they will remortgage their home if they've got capital in there, release some of that capital and then they will use those funds to make the home better and then worth more than they spent on it.

Speaker 1:

That's usually how I work and, believe me, I don't take that lightly. When I know how much money it costs to do a renovation, I take it really, really seriously about how that money is spent, where I suggest that people spend that money on which elements, and always, always, always, keeping in mind when I'm designing that this money that's being spent needs to be worth it at the end. The client needs to be able to get to the end of the project and for whatever life reason, they decide that they might be selling that home straight away. I'm always aiming for their property to be so well designed and so good that they can get their money back plus more, and so that's always in my mind, and I really would recommend that you think about spending that money on your home in the same way, and I feel like this is where great design really comes into play, and I think so many people and so many developers don't appreciate that. They don't think about how getting the design really really right can make such a difference when it comes to revaluing your home, making it worth more. And so I really really would urge you to think very carefully about your design, the process, planning your project really carefully, so that you're not wasting money and every little penny gets used well and puts value back into your home. And I would say the same thing for if you're using your life savings or if you're getting any sort of other loan. Any way you fund your renovation, you need to really look after your money and make sure that money is being spent well in the property and that you're improving it so much that it's going to be worth much more in the end by the end of your renovation.

Speaker 1:

Okay, so now let's look at the rising costs of renovating versus the value add. So you'll need to really look at these two quite carefully when you're considering renovating your house, because obviously you don't want to overspend on your home and then it's not adding that much value to the property. Now, I know it's not all just about money and resale value. We'll get into that a bit later but for the purposes of this point, let's look at these two things. So a few things to consider Material costs Material and labour costs have shot up since 2020.

Speaker 1:

I think I read that they were up 37% and so I mean that is a lot of money, that's a big increase and that's across the board. So that's across materials, labour, and then you've also got your professional fees architects, right for light solicitors, planning applications so it really can add up. So I would say carefully, carefully, budget. Make sure that you know everything that's going to be included in your project. Get your big picture budget together and then you can look at comparables on the market, see what your home might achieve once the works have been completed.

Speaker 1:

Very big, easy tip here is always look at square footage. If you're looking at square footage of similar properties, look at the square footage you would add and then the total after you've you've added that of your complete home, and then you can look up properties on sites like Rightmove and Zoopla and do some comparisons, obviously by area as well. Also, when you're doing the cost versus the value add, don't forget to add in buffers. I find that people generally forget to do this. So add in contingencies, think about perhaps what if the project overran?

Speaker 1:

I always say that the saying time is money is never truer than it is on a building site where every day can cost you thousands. So factor in a few days, factor in some time, for if you come across any hiccups, if there's any planning issues, you might come across some surprises, like structural issues and so on. So build in buffers, build in contingencies, add a a bit more than you think it's going to be, just to give you that buffer so that when you're working out your value add, you can always try and come out a little bit on top and you know that you've considered that. And if that doesn't happen, then that really is a bonus. So always keep in mind that end price, that ceiling price on your street. So look at what's been sold on your street recently in your area and that will help you work backwards as to how much you can figure out or you can think you should spend on your renovation so that you're not over capitalising and spending more in the total value of what your property might be worth when it's done. So now let's look at how much value different types of renovations could add to your home and then keep in mind there's certain types of renovations and extensions that are more valuable than others that will add more value to your home, and generally I always look at it in terms of square footage, because the more square footage you can add, the more your home will be worth, especially in places like here in london where property is quite expensive per square foot, per square meter. So that is a way you can also keep track of things.

Speaker 1:

But the projects that usually add the most square footage for the least amount of costs are generally loft conversions, because the structure is already there. If you have a good height to your loft, you can go up into the loft, make it living space, add a dormer or two and there's no proper building work. There's some structural work with the dormers. You might have to insulate, add some extra beam for strength and so on. Add some extra beams for strength and support and so on. But generally a loft conversion is one of the cheapest ways to add square footage and also it will give you value at the end as well, because you're adding that square footage.

Speaker 1:

Extensions are great. Also, it costs a bit more than doing a loft conversion because obviously you've got foundations to consider. There's a lot more work in the ground, and then you've got actual structure building, brickwork, roof work, all of those things, so that all adds up. So you'll be spending more on an extension, like a rear extension or side extension, for example, but you will also get a good value add at the end, whereas cosmetic changes like updating the interior painting new carpets, new flooring and so on those, although they will make your home a lot more lovely and livable, will not add as much value as adding square footage. Another thing that you can add value with is redoing your kitchens and your bathrooms. People are always after well-designed kitchens. Well-designed bathrooms can definitely add value to your home as well. So adding that square footage will definitely get you a better return on investment than pure cosmetic changes. So if you have the opportunity and you need the extra space, of course course consider those extensions like loft extensions, rear extensions, side extension.

Speaker 1:

Now let's look at when renovating doesn't make sense. So I think when it doesn't make sense, we have to be really careful about this, because if you've bought the property at a high price and it's already above or at the ceiling price in your street, obviously you're not going to get that return on investment if you spend further on it. We of course, have other reasons to renovate, not just making money. So perhaps it's that your family need the space and you really need to create some extra space in your home. You don't want to move, and then obviously that's going to make a huge difference to your your lives and how you live and your quality of life if you have that extra space. So it's always, if you're in that situation, weighing up which will be the best for you in your particular financial situation, perhaps you would like to spend that money because you can't move, or moving would be more expensive than improving where you are, and so perhaps you take that risk to spend that money to have a home that is better for you and your family, and perhaps you're planning to stay there longer term, in which case property prices might rise and you might make that money back in the end. But that is a risk.

Speaker 1:

So always keep these points in mind when you're thinking about renovating, when you're getting your quotes in, when you're looking at that value add and what it will cost. There could be a number of issues here as well which would mean that renovating doesn't make sense, another one being what if the cost of the renovation of the quotes just come in way too high beyond the money you can access to do the work? Obviously, then you cannot do it or you need to completely reassess. Perhaps you need to reassess your plans, scaling back, coming up with a different option, so you can look at different options rather than overspending when it comes to looking at if it will make sense or not for you financially. Financing could also be an issue, because interest rates have gone up quite a lot, so accessing money to do these kinds of works have it has become more expensive, and so if you're finding that just accessing that money is costing you a lot in interest, that's also something to consider, because you have to make sure that everything included, including the money you're getting, plus the interest on that money that might now be an extra large mortgage for you that that is financially manageable for you and your family. So you need to take all these into consideration when renovating and this is why I always recommend doing a detailed budget up front. I actually have an episode called Double the Time and Double the Budget. It's episode eight on the podcast, so do go back and listen to that one. That will really help you with your budgeting and just looking at and trying to figure out how much your project will cost before you even start works or start speaking to anybody. So go check out that episode.

Speaker 1:

Okay, but moving on to the next point here, that it's not all financial, is it? Our homes are not all about money. There are so many reasons why we want to renovate, why we want to invest in our homes, so there's a lot to consider, like our lifestyles that we want to lead, like where our kids go to school, the area around us and why we love living there, our, our community, perhaps where our friends are, our access to where our work is. There's so many reasons why we may decide to not move and stay where we are and make it better. So there are lots of considerations and, most of the time, quite long-term considerations to think about, not just the financial part of things, because our homes are such important parts of our lives, aren't they?

Speaker 1:

So we want to make sure that, if we have a family, we're not uprooting them unnecessarily if we, if you really have roots in a place and you don't particularly want to move and you'd rather stay where you are and renovate where you are rather than starting anew somewhere else, so there's just so much to consider, apart from the finances as well, and that's why I think it's such a big decision to renovate and we really need to think about everything, not just the financial side, of course. That financial side is really, really important because I've said this before it's renovating your home is one of the most expensive things you will do in your life, besides actually buying your home itself, and I take that really seriously. It's it's such a massive thing to do, and so you really need to weigh up everything the financial side and the non-financial side and take everything into consideration when you're going to make your decision, and that's why I do what I do everybody. I want to try and help you make the decision. I want you to try and renovate to a really, really good level. I want your home to be worth more at the end after your renovation, when you've spent all that time and all that money on it, and I really want people to do it well, because I see so many people just not quite understanding the process and not doing a very good job and then being really disappointed at the end. They've spent all that money and still their home is not quite working for them how they imagined it to, and so that's why I do what I do. That's why I make this podcast every single week for you.

Speaker 1:

I have some other resources that are going to help you. I'll go through them and I'll also put them in the show notes so you can click on them and go directly there. But, on this topic, some other resources that would help you are episode 54, the Hidden Costs of Renovating. Episode 44, understanding and Comparing Contractor Quotes. That's a good one for when your quotes start coming in and you want to compare like for like, which you really should be doing. And then we have episode 48 no vanilla Renault's, please.

Speaker 1:

So this one I actually did for developers, but I think in the context of what we're talking about here today. I think that'd be a great one to listen to in terms of how to renovate well with the roi in mind, but also creating a really beautiful home that's functional but not really boring as well. So do go listen to that one. And then I've got episode 35 renovating to sell. That's a good one as well when you're having your return on investment in mind at the end.

Speaker 1:

Episode 17 is how to get more accurate builder quotes, which is also a good one to listen to for when you're trying to get a grasp on what your project will actually cost. And that's it. I hope you go back and listen to those as well. I think, just listening to those and having listened to this one, if you're considering renovating, I really hope that it will help you come to make that decision that's right for you and right for your family and will give you that great home that you really want.

Speaker 1:

That's it for this episode. Everybody. Thank you so much for listening, if you're here at the end. Thanks so much. I hope that you enjoyed it. I hope it was helpful. If you did enjoy it and you did find it helpful, please give us a rating. Wherever you're listening. We really appreciate it. It helps me to be found by other listeners who might find this content useful as well. So we really always appreciate that. It just helps the podcast become more visible if people rate it or like it or comment and I always love to hear your comments Email me, leave me a comment, send me a DM Always happy to chat. Have a great week, everybody, and I'll see you next week.

Speaker 1:

For more information on my five pillar process for successful renovation, you can go directly to southplacestudiocom forward slash pillars where you'll find an introduction to the process which covers each of the pillars and what they cover. We also have a number of other free renovation resources. Go now to southplacestudiocom forward slash freebies. I have created some amazing freebies for you there. There is one on the process, like we just said. There is one on planning permission. There is one on kitchen design. There is another one on lighting planning. Go and check those out. There's so much free information there to help you with your renovation.