Home renovation
Renovating your home can be a massive task. To help you plan, manage, and execute your renovation project, we've developed this guide to point you in the right direction.
To plan a home renovation you need to set out clear objectives, work out a rough budget and timeline, find qualified tradespeople (unless you can do it yourself) and get council approval if you need it. You will also need to finance the renovation, which you can do through savings, taking out credit or topping up your home loan.
The benefits of home renovation
Many homeowners and investors renovate their properties with the objective of adding value and maximising their return. However, many Australian homeowners are also renovating their properties to better suit their lifestyles or to upgrade outdated fittings to reflect more modern designs and trends.
The objective and desired end result for your renovation will influence your budget, timeframe and renovation choices.
- Increase property value. A well-designed renovation can add significant value to your property. It is estimated that a major renovation can add up to 10% of the value of your home, particularly if you hold on to the property for at least 5 years. For example, if your property is valued at $500,000 and you spend $25,000 on your renovation, you potentially make over $50,000- twice your initial investment.
- Maximise sale price. If you plan on selling your property in the future, a carefully planned renovation can help boost the property sales price. Keep in mind that if you're renovating to sell, rather than renovating to live, you should take steps to ensure that any changes you make will appeal to a wide pool of potential buyers.
- Greater functionality. Whether it's a growing family, a home office or a retirement lifestyle, you may need to reconfigure the layout of your home, or create more space throughout. This could involve undertaking a major structural renovation to add new rooms, an additional bathroom or a guest room to leverage the available space.
- Avoid relocating. From real estate agent fees to stamp duty to conveyancing charges, the costs involved in selling and purchasing a new property can be exorbitant. Generally (and depending on the scale of the project), renovating or upgrading your existing home is a cheaper alternative.
When do Australians plan to renovate
According to Finder's First Home Buyers report from 2022, Australians spent $12 billion on home renovations over the 12 months to May 2022, a 12% increase from the previous year. For some buyers, renovating allows them to purchase their home at a discounted price and increase the value of their home. According to our survey, 4 in 5 first home buyers (80%) are buying with the intention of renovating at some stage. The survey also shows that 1 in 10 (11%) plan to renovate immediately, with a further 32% planning to renovate within 12 months of buying.
How to prepare for a home renovation
To avoid budget or timeline issues, you should plan carefully for your renovation prior to commencing the project.
Set renovation objectives
Before you begin the project, ensure that you set realistic objectives for all the things you'd like to achieve during the renovation.
Draft timeline
If you're contemplating major renovation, you may want to consider planning the renovation in stages. For instance, you might want to upgrade your bathroom but then wait a couple of months before renovating your kitchen area.
Assess your property
Before you commence your renovation, arrange for a home inspection to identify if there are any structural problems. This will help determine any hazards or problems from the outset, rather than creating stress and hassles if you discover them halfway through the renovation.
It's a good idea to get your property appraised by a conveyancer to determine its value as well as the projected value once the renovation is completed.
Council approvals
Check with your local council and authority to ensure that your renovation meets regulations and guidelines.
If you live in a unit or apartment, you'll also need to liaise with your strata manager or body corporate to see if your plans will be approved.
Building permits
Your home renovation must meet basic requirements for health, safety and structural soundness as stipulated by the Building Code of Australia. The permit process also ensures that your plans are in accordance with local government requirements such as planning and environmental regulations.
Set project budget
At the costing stage, you should break down your individual costs for each part of the renovation. For instance, if you're planning to tile a wet area, you should separate the costs for each separate task (e.g. waterproofing, tiles, labour) as this will help you keep tabs on your expenditure.
Once you've broken down your costs, you'll need to estimate your renovation expenses. Ensure that you source quotes from at least three different professionals for each major task to ensure that you get the best deal. Consider all the trade services you'll need including building inspectors, architects, engineers, builders and other specialised tradesmen such as plumbers and electricians.
It's crucial that you allow for hidden costs such as council fees and allow for a contingency buffer of at least 10-20% of your budget so you're prepared for any unexpected costs that may come up.
Estimating your renovation costs
Renovations can be pricey. According to quote data from HomeAdvisor, the average Australian renovation costs $51,184, with a range of between $19,473 at the lower end and $86,734 at the higher end.
Read more on estimating your renovation costs
How to finance your renovation
There are various ways to cover the costs of a renovation. Here are some of the main finance options, and you can learn more about financing a home renovation in our detailed guide.
How to increase property value from a renovation
Choosing the property
A critical decision involved with your value-adding capabilities is associated with selecting the right property type for your needs. If you can find an unpolished gem at a bargain price in a great suburb, you're off to a great start. From there, it's all about maximising your returns and ensuring you get the best possible sale price for a renovated home in that location.
Small projects that may increase value
There are times when simple upgrades can yield greater profits than large-scale projects. These can include:
- Paint. Freshening up the paint in a room or on the exterior of a house is a cost-effective way of transforming the appearance of a property.
- Street appeal. No matter how good the interior renovation might be, it's the kerb appeal that can sway a buyer's decision. Clean the bricks with a pressure cleaner and paint any peeling paint on gutters or eaves. Replace broken or rusted gutters and downpipes and be sure they're painted freshly too. Shabby or unkempt gardens should be neatened up. Use plants and shrubs creatively to create an appearance of more space or to highlight features of the property.
- Floor coverings. Consider replacing faded, worn carpets or worn vinyl flooring with more modern options. It's easy to transform a room into a more appealing space by considering different floor covering options.
Medium renovation projects that may increase value
There are properties that can be improved enormously by completing a medium-sized project. This is especially true with older style homes that may not have the same amenities and living space as more modern homes. Some medium-sized projects that may improve property value include:
- Outdoor entertaining area. Adding a pergola or outdoor alfresco entertaining area can be a big drawcard for many buyers, especially if the outdoor space flows smoothly from the interior of the home. Consider changing old narrow doorways to larger bi-fold doors or sliding glass doors to integrate the inside living area with the outdoor entertaining area for maximum appeal. Find out how much it costs to renovate your backyard.
- Kitchen. Updating a kitchen can be helpful for improving property values but ensure that you plan a functional kitchen design that leverages the available space to avoid overcapitalising. Learn more about kitchen renovation costs in Australia.
- Bathroom. Update old tiles and fixtures and consider creating more storage space in your bathroom with modern amenities to create a luxurious feel. Read our guide for bathroom renovations here.
- Laundry. Many older style homes have enormous laundry areas that are under-utilised. Consider adding more storage space or installing a workbench in the laundry. If the room is large enough, you may be able to divide it and install a separate toilet or even a small bathroom, including a shower and vanity area. This may increase the appeal of the home if there is only one main bathroom in the floor plan.
- Living area. Some older homes feature floor plans that have a small living area and a separate dining room alongside it. You may be able to improve the floor plan and create an open-plan feel by knocking down walls and redesigning what you have to create more space.
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How to finance your renovation
Here are five ways to finance your home renovation, from line of credit to refinancing.
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