Effect of cellar conversion on house price?

[ncrossland 10]

If you don't mind, how much did it cost? And do you have any photos?

 

The cost was approx £9.5k - we had the floor dug out slightly to give a precious few extra inches of height, and opted for a cavity membrane + pump system.

 

I've uploaded a few photos for you:

http://picasaweb.google.com/nick.panoptics/CellarWork?authkey=T_liL5fkviI

 

As you can see, the cellar had previously been tanked, but the tanking was failing, and allowed water in through the floor and wall joints when it rained (and sometimes when it didn't!). We had to have something done to allow us to continue to use it as a utility/storage room. I glad we opted to have it done "properly", rather than just do the minimum required to paper over the cracks.

[Ray Foulkes 10]

We're considering converting our cellar - and since this is an expensive job, I'd like to think about what value it would add to the house.

 

It's a 2-up 2-down, 2 bedroom terrace in Crookes, with attic converted to the 2nd bedroom. When we moved in, the cellar had previously been tanked, but not properly converted - more like a garage - it was slightly damp and only used for storage. We currently have a freezer and drier down there, and use it for paint etc storage - it needs a dehumidifier to keep the place dry and usable.

 

We're looking at having it properly waterproofed (membranes, sump, etc) and properly plastered, lights, etc. We'd like to use it as a proper utility / storage room. We'd use a company which offers 10 year insurance backed guarantee.

 

Can any estate agents / valuers etc tell us approx what difference (even in %) adding this extra room would make to the house price?

 

Cheers

 

 

 

Many people evaluate major expenditure on home improvements based upon the added value to their home vs. the cost of doing the work. This makes sense if you are planning to sell the property shortly afterwards but if you are not then it is more relevant to ask yourself, is it worth it to you now, house prices and the value of a cellar conversion can go up and down so it is impossible to use today’s valuation as a return on investment. However, for those considering a conversion now and what they might get back when they sell a few years later, it is valid to consider the value of the use that you will enjoy in addition to what you will get back when you sell eventually.

 

A good way of evaluating the benefit to you now is to ask yourself the question, “How much would I pay to rent the equivalent space?’ This is easy if it is a home office, as you can look at the cost of renting an office of comparable size. And don’t forget to factor in the cost and time and inconvenience of travelling to a rented office. For a playroom or other recreational purpose it may be a little more difficult to ascertain an equivalent rental value, but you could look at the cost per square foot of a typical domestic rental or just ask yourself the question ‘How much would I pay to rent the finished space if I could, “what would be value for money for me?” Many people may shrug their shoulders and say “well I have no idea” if you find yourself thinking like this, start with two extremes, a high and a low one – you would probably not pay £1,000.00 a week but you would jump at the chance of, say paying £10.00 a week. So the true answer lies somewhere in-between. Try narrowing the gap, would you pay £500.00? (probably still no) or £50.00.? Then £400.00 or £100.00. When you start to get close to a figure that you feel comfortable with, that is what it is worth to you.

 

Next, look at what it will cost you per week in interest repayments, wither lost interest on investment money that you might be paying with or interest on a loan that you might take out. Do not include the capital repayment as this is a form of saving, i.e. you get that back eventually when you sell the property or at least you have nothing more to pay when the loan is paid off but you still enjoy the added value, so just take interest payments into account and don’t forget to factor in the possibility that interest rates may change in the future.

 

Now you can see if the cost per week or per month is more or less than the value per week or per month that you will enjoy. If the cost is less than the added value then it makes sense to go ahead and if not then it makes sense not to.

 

Another interesting approach is to compare it with whatever else you might spend the money on. For example if the annual interest is £3,000.00 a year, ask yourself would you rather have an annual holiday worth this amount - or whatever else that you might choose to spend the money on – or the extra room in our house? If it is worth it to you, based on that analysis, it is probably worth it to others who may be your prospective purchase in the future.

Then look to see if any of your neighbours have done a cellar-conversion. if several of them have converted the cellar then you can be fairly sure that it will be a good investment as it shows that there is a general demand in the market place for converted cellars in your type of property and it is the market that determines the actual realizable value of anything.

The acid test, and my favorite one, is to take a reverse view. If the cellar conversion was already done and paid for, ask yourself this “would I accept the cost of the conversion given to me in cash to undo the cellar conversion and have it put back to the original condition”? So if it is going to cost, say £30k, just imagine it finished and paid for, would you accept the £30k to have people come in and rip it all out and leave you with a damp, dark unusable space again? If that thought horrifies you, if the answer is, ”no way!” then the cellar conversion is definitely worth doing, as that is where you will be when it is finished, the owner of a beautiful useful additional space and a certain amount of money gone in compensation for it.

Finally don’t forget to factor in the opinion of your spouse. I recall an anecdote where the wife of a friend of mine asked him, ‘Would you rather have the bigger house and a happy wife, or the smaller house, and just a wife!” Matrimonial bliss can be priceless!