20 hotspots set to boom from infrastructure

Bad design can lower value

Posted on Tuesday, February 22 2011 at 8:00 AM

Poorly planned and constructed renovations can devalue a property, warns Archicentre.

Rather than upgrading by buying another home and moving, people are choosing to stay put and invest the $50,000 or $60,000 it would have cost to move in renovating their homes, according to the building advisory service of the Australian Institute of Architects.

But Archicentre Queensland manager Ian Agnew says many people invest in property to secure their financial future without a planned strategy or any idea of the cost of renovating.

"People actually devalue their investments with poorly conceived designs or inappropriate materials, providing a negative cash flow for the investments and poor reselling options," he says.

Some of the worst examples involve period houses, says Agnew, where poorly designed flat roof extensions have been added, houses have been painted in garish colours and money has been poured into expensive bathroom and kitchen fittings at the expense of light and space.

"Another costly mistake is to inadvertently change the house from one market segment to another  -  for example, converting the third bedroom of a three-bedroom house into a walk-in robe and ensuite will change the house from a three-bedroom house to a two-bedroom one with a drop in value of possibly $100,000 after spending perhaps $40,000 on the project," he says.

"The basics of planning and costing the renovation to work within an available budget, combined with a clear understanding of how to tender the work out and manage the renovation project, is fundamental to the success of any renovation."

Meanwhile Agnew points out that a well planned and executed renovation can see owners recoup their money, while enjoying a greatly improved home.

Archicentre's tips for renovating a property for maximum return include to:

• Purchase a property that's structurally sound
• Assess the financial potential with a design and cost analysis before buying
• Ensure a well-designed, accurately-costed feasibility study is prepared before committing to the project
• Check the planning regulations to avoid costly planning appeals
• Ensure the design, finishes and fittings don't overcapitalise the property
• Use the design to deliver lifestyle requirements being demanded by the market
• Create a design where additions are compatible with the existing structure
• Obtain competitive building or subcontract prices