Almost one in ten, or 9% of UK homeowners plan on making home renovations this year instead of moving due to rising living costs, data from Together shows.
The drivers behind this move include needing a home that is more energy efficient (say 17% of homeowners), as well as “getting tired with faults” in their current homes (say another 16%), according to the lender’s Opportunities in Challenging Times report.
The backdrop to this, are “rising interest rates that are dampening appetites for new home purchases this year,” it says.
The Bank of England has hiked interest rates 11 times since December 2021 to stand at 4.25%, while inflation is 10.4%, a 40-year high.
Homeowners who plan on making renovations expect to spend £12,200 on average on upgrades, says the specialist lender.
A third of homeowners who want to make improvements this year plan on fitting new carpeting or flooring, 30% will install a new kitchen, and 28% will upgrade their bathroom this year, the survey adds.
A further 16% plan on installing solar panels, insulation, heat pumps and draught-proofing.
The report points out that while 57% of homeowners are aware of second charge loans as an option to fund these renovations, 40% “are overlooking this option”.
However, the study points out that total second charge lending last year topped £1.7bn, a 45% increase from the previous 12 months, according to the latest industry data from Loans Warehouse.
The lender adds that 90% of all second charge funding is valued at £190,000, or greater, according to its own internal data.
Together head of personal finance intermediary sales James Briggs said: “While the cost of living and fears around rising interest rates may threaten and cause some homeowners will property ambitions to pause plans, there is clearly still a healthy appetite for new purchases this year.
“And, while some may not move into new homes, we are seeing a trend for homeowners planning to spend on home improvements on their current properties. That being said, the reliance on people’s savings and additional loans may cause undue stress when keeping up with existing bills and repayment costs; all of which could hamper plans later down the line.
“There is a real risk of homeowners overlooking the value of second charge mortgages which can offer a simple route to unlocking further equity to fund these renovation projects without them having to resort to unsecured borrowing via a personal loan.”
