How to keep under your house’s ceiling price
Here’s a home renovation subject plenty of people haven’t heard of. You’re keen to get going renovating your home. You’re full of great ideas and the place is going to look spectacular when you’ve finished. But hang on – are you risking spending too much and ending up out of pocket when you sell? It makes a lot of sense to know the maximum amount a home like yours will go for, so you don’t overspend doing it up. This is known as a ceiling price. Read on to find out everything you need to know about what a home’s ceiling price is, and how to stay below it.
What is a property ceiling price?
Put simply, the ceiling price of your home is the maximum price it will sell for, whatever you do to it. Your home is great. But it could be better. Maybe you’d love to add a roof terrace, a kitchen or bathroom extension, an extra bedroom, a room on the roof, or pay out for an extremely smart and expensive new kitchen. It’s exciting. The potential is there. But there’s only so much value you can add to a property before it hits a ceiling price that buyers will refuse to go beyond.
If three bed terraces in your road and surrounding areas go for an absolute maximum of £300,000, whatever they’re like inside, you want to make sure you’ll get the right return from yours, covering the extra money you’ve invested in perfecting it. If all the other houses in your road have two bedrooms and you’ve added two more bedrooms to yours, costing a small fortune, it’s highly unlikely you’ll be able to sell it for much more than the others.
Next we’ll look at understanding the potential value of your place, and after that we’ll dive into how to find out the ceiling price of a house.
Understanding the potential value of your house
So how can you figure out how much value you can add onto your property before reaching the ceiling price? First, you need to pin things down by clarifying the maximum sale price you’re likely to achieve. As a rule your home’s ceiling price is worked out by looking at the maximum price any property of a similar size and age in your street and surrounding streets has sold for in the past, plus a valuation expert’s predictions around the maximum amount it would potentially sell for.
As you can imagine, the ceiling price will affect the amount you can reasonably spend on home renovations, improvements and extensions. If you’re not planning to sell any time soon, maybe for years, you’ll have a bit more wriggle room, simply because in the longer term, whatever happens to the market, house prices tend to go up. If you want to renovate then sell quickly, or sell in just a few years’ time, it’s crucial to stay under the maximum potential sale price.
You can only add so much value to a property. But what, exactly, affects your decisions? You need to know for sure the changes you make will give you the best return in terms of your lifestyle as well as your finances. If a fifty grand kitchen won’t change your life dramatically but will leave you having spent more than you can get back when you sell, you lose. And the losses can be dramatic.
How can I work out my house’s ceiling price?
Here’s a guide to working out your property’s ceiling price. First, look up the area’s ‘sold property’ prices on the gov.uk website. You can find out how much a property sold for in England and Wales on the site, and it’s a paid-for service. You search for sold prices by address. There’s Scottish house price information from Scotland’s land and information service to explore, and Northern Ireland house price information is available via Land and Property Services.
You can also search the UK House Price Index, this time for housing price trends, searching by date, property type, region, county, or local authority. The index contains data from January 1995 onwards for England and Wales, from January 2004 for Scotland, and from January 2005 for Northern Ireland.
If there haven’t been many sales recently in your street, or similar streets nearby, the government’s data can be inaccurate. Take a look at Zoopla’s price estimates for a decent rough picture of the current value, not including the cost of your potential renovations. It’s sensible to top all this off with a proper valuation via a local estate agent, who’ll have a good idea of what it could potentially sell for.
Now you can figure out how much you can reasonably spend renovating and improving. The insight will drive your budget, which will inform your plans. The key is to add as much value as you can without overspending. Prioritise improvements that don’t cost much but add lots of value, and the things that add some value but are easy and cheap to do. If there’s any budget left over you can spend it on extra projects, or stop spending at this stage and make more profit when you sell.
Understanding a house’s ceiling price
Once you’ve done the research you’ll know how to keep under your house’s ceiling price. You’ll have a clear idea of how far you can take renovations and improvements, what you can reasonably spend, and the return you’ll get when you sell. Stay safe, get the knowledge, and talk to experts when you need to. The Strawberry Star team is always happy to help.