5 Key Decisions to Set Your Home Improvement Budget

For many of my clients one of their first questions, after they explain what they want to achieve is,

"Can I afford this?"

Before I answer this question I want to share with you a story about one of my clients.

Recently I caught up with my client and she told me how her extension was working out. When I worked with her and her husband on their family home I developed a few options including a fit-easily-within-budget option and a spend-to-the-maximum option.

She was really keen on the spend-to-the-maximum option. This was her dream home option. It included a large new kitchen diner that would overlook and open up to the garden.

In the end the fit-easily-within-budget option was their chosen way forward. This option met all their needs from their home, leaving the kitchen, dining and living room untouched, and giving them a new guest suite / hobby room, with a shower room and utility.

I asked her if she felt that they had made the right decision going with a project that met their needs but not necessarily all her dreams. She told me that, although they could have afforded the bigger project, they are happy that they decided not to stretch their budget and to keep a financial buffer that they could use in other ways.

Since the work has been completed my clients, have traveled extensively and enjoyed many evenings out indulging their passion for music at concerts around the country. She told me that she was really pleased that they had chosen not to spend to their maximum budget as if they had then they wouldn't have been able to live the same lifestyle, with as many exciting holidays or rock-n-roll gigs.

I was so pleased to hear that they are enjoying their life, that their home works well for them, and that they were really satisfied with the choices they had made.

This high level of satisfaction and enjoyment of life is what I hope for all of my clients.

So back to the frequently asked question, Can I afford this?

In truth the simple answer is that I can not answer this for you. Only you know what your finances look like and what your priorities in your life are. But there is a more important question, that I can help you answer.

What you should be asking yourself is...

Is it worth doing this work?

Here I'm giving you 5 key things to consider that will help you to answer this question.

Only you know what your values, needs and desires are, and how much it is worth to you to meet those. All I can do is ask you questions to help guide you to making your best decision. A decision that you are not going to regret. I want you to be satisfied and enjoy your best life just like my clients.

1 |    How long will you live here?

If you're planning to move in the next 5 years then look at other homes in your local area, which have the types of spaces and features that you'd like. Compare the market value of these homes to yours. Particularly look at homes that are similar to yours that have been added to.

Speak to a local estate agent to get some help understanding the current value of your home and the potential value once you've carried out the work.

Ask yourself if you can you do that work to your home and then recoup the costs of that investment when you come to sell.

Also ask yourself if it is important to you to be able to recoup your costs, or would living in a home that works for you, even if only in the short term, would be worth the spend even if you can't recoup it?


Or perhaps you're planning to live in this home for the rest of your life, or at least for as long as you can foresee. In that case it will be more difficult to assess resale value possibly several decades into the future and perhaps this is less important to you.

Ask yourself how much you feel it is worth live to live in this home but to make it better and suit your specific desires, needs and tastes. What value do you place on living in this home and having this home suit you better.

Consider how much it would cost to buy a house that meets your needs and desires without having to do any work to it. If you can find one then check what the difference in value is between your potential resale value and the purchase price of your ideal home.

2 |  Do you need more space or better space?

If you decide that you need more space then as a starting point you can estimate around £2k per square meter for new build space and about £1k per square meter to upgrade and remodel existing space. This is in no way accurate costing for any particular project but is a reasonable guideline to start to outline what budget you will need.

As you can see it generally costs less to make your existing space work better than it does to build more space.

Estimating budgets based on cost per square meter is a method that you can use to get a ballpark budget figure, that can go up or down from this depending on the detailed decisions that you make. Sometimes these decisions may not be all up to you, for example if you have a really special building, such as a listed building or live in a conservation area, then you may have to meet special requirements and these figures can get much higher.

If you feel that you need more space then consider what do you need more space for? Then you can ask yourself if these uses are really worth the project spend.

If you have enough space but you want to make better use of your existing space then consider how your existing space is wasted or not working for you.

3 |   How are you going to pay for it?

Is it from savings, mortgage, lottery winnings, a home building loan, inheritance? Where the money is coming from may affect your project. For example if the money is going to be released in stages this might affect your construction contract.

If you need to find the money somewhere then you need to get specialist financial advice. Speak to an independent financial advisor, a mortgage advisor or broker, to get advise on how to raise money to fund your project.

Do you really prefer to spend this money on your home or would you rather spend you money going to music concerts and extravagant holidays? Consider what other things you could be spending that money on and which is more important to you.

If setting your budget too high will mean sacrifices in other areas of your life then you need to be happy to live with those sacrifices. You might have your dream home, but if paying for that is preventing you from living the life you dream of then is it really worth it?

4 |   Have you included for extra or unexpected costs?

On top of the construction budget you need to add 20% VAT and fees for specialist consultants. It is also wise to have some contingency money just in case something unexpected happens on site and this bumps up the cost.

Your basic consultants that you'll need to deliver a good project, are your architect and structural engineer. On top of these, depending on your project, your building and your area, you may also need surveyors to look at a range of things such as asbestos, drainage, trees (arboricultural), bats (ecology), amongst many other possibilities.

You may also want additional specialist designers on your team such as an interior designer, lighting designer, integrated technology or home cinema designers, sustainable renewable heating and energy systems designers and engineers. This depends on the quality of the build that you're looking to create. Which leads us neatly to this final question.

5 |   What quality of build do you want?

Quality is a difficult thing to define. It means different things to different people. You need to define what quality means to you.

Then you need to decide if your idea of quality is more or less important to you than the cost to achieve it.

Here are some questions to help you decide what quality means to you.

How long do you want this work to last?

How long do you want this work to last? Do you want 25 years guaranteed and no more. Do you want something short term that you can sell on and don't really care about the long term effects because you'll be out of there. Or are you looking to create a legacy that will last for generations to come. Perhaps something that you can pass on to your grandchildren and great grandchildren. This leads on to other questions such as how durable do you want the materials to be?

Are you happy to carry out regular maintenance work, or not?

Consider the ongoing effort and costs of maintenance. Would you prefer to spend a bit more upfront so that you don't have so much ongoing maintenance to do? Or is there a particular material that does need ongoing maintenance, maybe is a bit more fragile, but you're happy to do that because you really love that material. An example of this might be timber windows instead of UPVc.

Is there anything that you want because you feel that it's the right thing to do?

For example would you prefer to use renewable materials, like timber instead of concrete, or locally made materials like Cumbrian sheeps wool insulation instead of imported German wood fibre board. Any aspect of quality related to ethical or environmental standards.

Will you have any special requirements imposed on your project?

For example if it's a listed building or a conservation area, you might have to use a particular material or traditional technique, such as a Welsh slate roof.

Summing Up

You need to consider and decide a few key things to set the right project budget for you. Improving your home can be an investment and it can also be fundamental to the satisfaction you get from your project and the basis of a lifestyle that you dream of.



Here are the points to consider in bullet form

• decide if this is your short or long term home
• decide if you need more space or better use of existing space
  
• decide where the money to pay for this is coming from
• include for any extra costs, like consultants fees, VAT and contingency
• decide what quality means to you and if that is more or less important than cost

Setting your budget is only one of the key decisions that need to be made when preparing for a construction project.

For guidance on other fundamental decisions you need to make at the beginning of your project get my free Design Your Home Vision Checklist.

Help me with my Home Vision!