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Home improvement projects are fuelling a building boom amongst builders, but who is paying for it? Figures released by the Federation of Master Builders (FMB) suggest that homeowners are remortgaging to fund home improvements.
A survey of homeowners undertaking building work found that almost half (48%) were spending more than £30,000. Six out of ten of those surveyed were increasing the amount of living space, with four out of ten adding a full-blown extension whilst the rest opted for conservatories or loft conversions.
These findings are backed up by figures from the Council of Mortgage Lenders (CLM) released this spring. They found that 89% of remortgagers spent their equity on home improvements, against just 12% using the money to fund holidays, new cars or household goods and appliances. CLM figures released today (20 August) indicate that the rush to remortgage continues. At £10.7 billion the value of remortgaging was 5% higher than last month and the second highest monthly figure ever.
Said FMB director general, Ian Davis:
"The upward march of house prices means there is a huge amount of capital tied up in property and low interest rates are making it possible for many homeowners to cash in on the windfall. In some parts of the country it now costs almost as much to move as it does to build a small extension, so it's not surprising that people are staying put and adding on."
Low interest rates mean that £30,000 is small change for some of those extending their homes, with many prepared to pay over £100,000 to get the space they want.
Builders working in the residential sector are amongst the main beneficiaries of this spending power. The FMB's own State of Trade survey recorded a 15% increase in home improvement work in the second quarter of the year, bringing the annual increase to 79%.
Said Ian Davis:
"Homeowners should be prepared to wait for a good builder. In this climate many of our members have full order books for up to a year ahead. It should ring warning bells if someone can do the work straight away. Our advice is to do your homework and check the builder out thoroughly. Take up references, talk to previous customers and go to see the work if you can, and don't try to get a cheap deal by paying in cash as there is little come back if things go wrong."
The FMB offers a match-making service for builders and homeowners through its website, www.findabuilder.co.uk and freephone hotline 08000 152 522.
First posted: 22 August 2003. Last modified: 22 August 2003.
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