Home improvement activity in the UK has stayed high in recent years. Many homeowners are choosing to improve their existing property rather than move, partly because of higher mortgage rates and the costs involved in moving. Some projects are more commonly associated with adding value than others, though no improvement carries a certain increase.
What are the current trends in home improvement?
A few trends are worth noting for homeowners thinking about renovation projects:
- Energy efficiency has moved up the agenda. Energy Performance Certificate (EPC) ratings are increasingly factored into property valuations and, in some cases, lender decisions. Properties with lower ratings may be harder to sell or remortgage in the future. The UK Government has set targets for improving the energy efficiency of homes, though the timelines and requirements have been subject to change. For the current position, the GOV.UK page on Energy Performance Certificates is a useful first step.
- Green mortgage products have grown. Some lenders now offer preferential rates on mortgages for energy-efficient homes. The link between EPC rating and borrowing costs is worth understanding before starting work. MoneyHelper's guide to green mortgages sets out how these products work.
- Loft conversions and kitchen extensions remain popular. These continue to be among the projects most often cited by estate agents and surveyors as adding usable space and, in many cases, buyer appeal. However, the actual effect on value varies by location, property type, and the quality of the work.
Why does this matter?
Understanding which improvements are commonly seen as adding value can help homeowners plan their budget and decide whether borrowing makes sense. A project that adds meaningful value may make a secured loan or home improvement loan easier to justify. However, it is important to look at total borrowing costs, not just the upfront work cost.
In plain English: the cost of a loan can sometimes outweigh any increase in property value, particularly on shorter repayment terms with higher interest rates. Comparing the full cost of borrowing, using the APR and total amount repayable, is a useful step before committing.
What value might common projects add?
The figures below are indicative ranges drawn from RICS guidance, Nationwide Building Society house price research, and published estimates from the HomeOwners Alliance. They are illustrative only; actual outcomes depend on location, property type, and quality of work.
| Project type | Typical cost range | Commonly cited value uplift | Planning permission usually required? |
|---|---|---|---|
| Loft conversion (dormer) | £40,000–£65,000 | 10–20% of property value (RICS / Nationwide) | Yes, in most cases — permitted development rules apply in England; check with your local authority |
| Single-storey rear extension | £20,000–£50,000 | 5–15% of property value (HomeOwners Alliance) | Often permitted development up to certain size limits; larger extensions require full planning permission |
| Kitchen renovation (mid-range) | £8,000–£25,000 | 3–8% of property value (HomeOwners Alliance) | No, in most cases |
| Bathroom renovation | £4,500–£12,000 | 2–5% of property value (HomeOwners Alliance) | No, in most cases |
| Loft insulation and cavity wall insulation | £300–£1,500 combined | Can improve EPC rating by one band; Nationwide research links higher EPC ratings to a premium of up to 5% in some markets | No |
| Air source heat pump | £7,000–£15,000 (before any grant) | EPC improvement; resale effect varies; government grants available via the Boiler Upgrade Scheme (GOV.UK) | No, in most cases |
A note on regional variation: Value uplifts for space-adding projects such as loft conversions tend to be higher in London and the South East, where property prices are higher and additional square footage commands a greater premium. In the North of England, the Midlands, and parts of Scotland and Wales, the same project may cost a similar amount but add a smaller absolute uplift. It can help to compare local sold prices for similar properties before committing to a large project.
A note on planning permission: Loft conversions and extensions are among the most common projects that require either permitted development approval or full planning permission. Permitted development rights allow certain works without a formal application, but limits apply and rights differ in conservation areas, listed buildings, and flats. A useful first step is to check the Planning Portal's permitted development guidance before instructing a builder.
How do borrowing costs compare to a potential value uplift?
To make the borrowing-cost warning concrete, consider this illustrative example:
Scenario: A homeowner takes out a personal loan of £20,000 to fund a single-storey rear extension on a property currently valued at £250,000.
- Loan amount: £20,000
- Representative APR: 8.9% (illustrative; actual rate depends on lender and personal circumstances)
- Repayment term: 5 years
- Monthly repayment: approximately £414
- Total amount repayable: approximately £24,840
- Total interest cost: approximately £4,840
If the extension adds 8% to the property value, that represents an uplift of £20,000 on a £250,000 home. In this scenario, the gross uplift and the loan principal are similar, but the interest cost of £4,840 means the net financial position is less straightforward than the headline uplift figure suggests. On a shorter term or higher APR, the interest cost rises further.
In plain English: a value uplift figure quoted by an estate agent or surveyor does not account for the cost of borrowing. Comparing the total amount repayable, not just the loan principal, against the estimated uplift gives a more realistic picture.
What to read next
For a fuller picture of how borrowing for home improvements works, the following guides are a good starting point:
- Home Improvement Loans, covers personal loans and secured borrowing options for renovation work.
- Secured Loans, explains how secured borrowing works, the risks involved, and what to check before applying.
- Personal Loans, a plain-English guide to unsecured borrowing for home projects and other purposes.
- Loan Interest Rates, helps you understand what affects the rate you are offered, including APR and total cost comparisons.
Sources
- MoneyHelper: Borrowing to pay for home improvements, guidance on loan options for renovation work.
- MoneyHelper: What is a green mortgage?, explains the link between EPC ratings and mortgage products.
- GOV.UK: Energy Performance Certificates, current requirements for EPCs when selling or renting a home.
- GOV.UK: Boiler Upgrade Scheme, grant funding for heat pumps and other low-carbon heating.
- Planning Portal: Permitted development rights for householders, guidance on which projects require planning permission.
- Nationwide Building Society house price research, including analysis of EPC ratings and property values.
- HomeOwners Alliance, estimated value uplifts for common home improvement projects.
- RICS (Royal Institution of Chartered Surveyors), guidance on property valuation and the effect of home improvements.