Begin with a viable purchase
A dated kitchen or tired decoration can be an opportunity, but visible improvements are only part of the assessment. Structural condition, services, damp, title and access may change the budget or make a property unsuitable. The right checks happen before acquisition.
We work back from evidence for the improved home’s likely value, allowing for purchase costs, refurbishment, contingency, holding costs and the exit. An optimistic resale assumption cannot compensate for a weak purchase.
Allow for the complete cost
- Purchase price, applicable stamp duty and legal costs.
- Survey and professional advice appropriate to the building and project.
- Refurbishment specification, labour, materials and contingency.
- Finance interest and fees where borrowing is used.
- Insurance, utilities and other holding costs.
- Selling costs, agreed service fees and tax considerations.
Tax treatment depends on your circumstances and the project structure. Use GOV.UK stamp duty information and your adviser’s assessment rather than assuming that one example applies to everyone.
A worked illustration
One of our current planning examples models £65,950 of investor capital alongside £75,000 of illustrative finance: £140,950 in total project costs. At an assumed resale of £155,000, the model leaves £14,050 before tax. That is project profit after the modelled costs, not a guaranteed investor payment.
If the resale were 10% lower, at £139,500, the same costs would produce a £1,450 loss before tax. A delayed sale could add further holding and finance costs. The funding terms and allocation of proceeds must be agreed for the actual project.
See all three capital examples and their cost breakdowns. These are hypothetical models with illustrative images, not properties currently offered for investment.
Control the works and prepare the sale
A written scope makes the specification, allowances and responsibilities clear. Progress needs checking against both that scope and the programme. When new information appears, its effect on cost and timing should be explained before decisions are taken.
The exit deserves attention early: the likely buyer, achievable finish, agent advice, presentation and sale costs all influence the plan. Completion depends on the market and transaction process; a target date is not a promise.
Match the project to your capital
Our examples cover different capital levels and funding assumptions. A cash-funded project and a project using short-term finance have different costs and exposures. Talk through your available capital and timeframe so we can explain what would need to be assessed.