First-time buyers are increasingly choosing cheaper homes in need of renovation as affordability pressures continue to limit access to the housing market, according to research from Nationwide.
The building society said a poll of 2,000 first-time buyers found that two-thirds bought a cheaper home because it required DIY or renovation work, with 19% saying the property was significantly cheaper.
Nationwide said the trend was most pronounced in the North East and least common in Scotland.
For many first-time buyers, choosing a property in need of work was a deliberate strategy rather than a compromise. The research found that 41% said it allowed them to buy in the location they wanted, while 30% said it enabled them to shape the home to their own tastes over time.
A further 23% said they hoped to increase the value of the property, while 22% said they wanted to prepare the home for future plans, such as starting a family.
RENOVATION WORK OFTEN EXCEEDS EXPECTATIONS
Nationwide said 93% of first-time buyers had completed at least one DIY or renovation project since moving in, with 34% saying they had carried out many projects.
However, 75% said they had done more DIY or renovation than they initially anticipated. A quarter said they had done much more than expected, while 18% had taken on major structural projects.
The North West had the highest proportion of first-time buyers taking on more work than expected, at 83%. This compared with 68% in Northern Ireland and the South East.
Despite the additional work, Nationwide said enthusiasm remained high, with 89% of first-time buyers describing themselves as confident, excited or willing to take on DIY. One in five said they specifically chose a property that needed work because they enjoy DIY and renovation projects.
BUYERS SPEND THOUSANDS ON IMPROVEMENTS
The research found that six in 10 first-time buyers had spent more than £2,500 on DIY and home improvement projects since moving in, while 29% had spent more than £5,000.
The most common projects included painting and decorating, kitchen and bathroom improvements, new flooring and general repairs.
Nationwide said larger structural projects, such as knocking through walls, building extensions or converting lofts, had been undertaken by almost one in five first-time buyers.
Its What Adds Value House Price Index report suggests that larger renovation projects can also deliver a financial return. Nationwide said adding a loft conversion or extension with a large double bedroom and bathroom could increase the value of a typical three-bedroom home by up to 24%.
MORTGAGE PLANNING
Nearly two-thirds of first-time buyers said they had factored DIY or renovation expenses into their savings when building their deposit, while 21% said they borrowed more on their mortgage so they could retain savings for improvements after moving in.
Nationwide said its Helping Hand mortgage boost allows eligible first-time buyers to borrow up to six times income, which could help some buyers retain funds for renovation work.
Louis, 30, from Essex, used Nationwide’s Helping Hand to buy his first home in Southend.
Louis said: “The property I wanted to buy needed some work done to it, so when my broker, John Charcol, mentioned Nationwide’s Helping Hand, it seemed the perfect solution. By being able to borrow more through my mortgage, I was able to put down a smaller deposit.
“This freed up money which I have been able to put towards the renovations on the house. I already bank with Nationwide so it’s great I’ve been able to get my mortgage with them too in what was a smooth and quick process.”
SAVVY CHOICE
Carlo Pileggi, head of mortgage products at Nationwide, said: “For many first-time buyers, opting for a cheaper property that needs work is a deliberate and savvy choice rather than a compromise.
“By taking on a home requiring renovation, they are not only able to get onto the property ladder in the location they want, but they can shape it to their own taste while adding to its value.
“Although there’s a real enthusiasm amongst first-time buyers to roll up their sleeves, our research suggests many have had to undertake more work than they initially intended. This is where planning and having the right support can make a real difference.
“Nationwide’s Helping Hand offers eligible buyers the opportunity to borrow more, helping them plan renovation costs and feel more in control as they turn a fixer-upper into the home of their own.”