FOOL'S EYE VIEW
Protecting The Value Of Your Home

By James Carlisle
November 25, 2002

The British are a nation of homeowners. People everywhere are discussing the price of the three-bed semi round the corner or swapping deadlines for bursting of the property bubble (as they've been doing for at least three years). We're obsessed with the subject, which makes it all the more surprising that people seem to take such little care of their homes.

It makes no sense. Apart from anything else, our home is where we live, so it would seem a sensible idea to keep it nice! Not only that but, for most homeowners, their home is by far their most valuable asset, so it deserves some care and attention. As it happens this week is National Maintenance Week, so it seems all the more appropriate for a little look at this subject.

Maintenance

The first part of looking after your home is the maintenance. Figures get bandied around for the proportion of a property's value that you should reckon to spend on it in an average year but they're of limited use. Substantial but infrequent expenses are spread out over the years. So in many years you might spend very little whilst in others you'll spend a packet.

The best idea is to keep focussed on doing whatever is necessary before it becomes necessary. Things will work out a lot cheaper in the long run if you follow the old saying -- "a stitch in time saves nine". It's a lot cheaper to fix a roof, for example, before water comes through and takes down the ceiling with it. So it makes sense to check everything about your property on a fairly regular basis. There are scores of books and websites that explain common warnings signs and can help you learn how to check and fix things. It's much the same principle as servicing your car in order to protect its resale value.

Improvements

Once you're on top of any maintenance projects, you may start to think about improvements. With these, the greatest difficulty is in working out what's worth doing. In theory, you can play with some complex financial sums to work out the rate of return on any money you spend on your house. The trouble is that you have to start by estimating the value that any improvement adds and that, of course, is itself the million-dollar question. So it doesn't get you much further forward.

It's better to stick to the basics. There are basically two reasons for doing 'improvement' work on your home. The first is to make it nicer for you to live in and the second is to improve its value. The longer you expect to live somewhere yourself, the more likely you are to be influenced by the first point, whereas the sooner you plan to move, the more likely you are to focus on the second.

In terms of improving your home's value, it generally makes sense to stick to things that are appropriate to a particular property, while striking a balance between your enjoyment of the property and how its value might be affected. For example, a new outdoor swimming pool is unlikely to do much for a property's value in Invernesshire. A purchaser would most likely fill it straight in and therefore not give you value for it in the property's price. An upgraded central heating system, on the other hand, might please both yourself and any purchaser down the line. There is more on this subject in this Fool's Eye View from last year.

What it comes down to is this -- being out of the ordinary with your property is liable to cost you money, so don't do it! (Unless you really want to, that is.)

Getting the work done

There are clearly some jobs that most people will expect to do themselves. Likewise, there will always be jobs that require a professional. Wherever you lie on that particular scale, though, it doesn't absolve you of the responsibility to understand a bit about how your home works.

The building industry is notorious for an infestation of sharks, so good builders are as valuable as they are hard to find. Just like financial advisers in fact -- you haven't a hope of knowing whether you're getting a good service unless you know something about the subject yourself. It's a sad fact, but you just can't afford to be that trusting!

So just as you would with money matters, get a few books, surf around the internet and, above all, communicate with others. There is even the excellent Building/DIY discussion board here at the Motley Fool. Before long you'll know your lagging from your grommets and, even if you still don't want to do the work yourself, there will be one less person for the unscrupulous end of the building industry to take advantage of.

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