What homeowners should consider in the eternal 'move versus improve' debate - from someone who has been there: Sarah Coles

Moving is technically less traumatic, but it’s still one of the most stressful things you can do in life. It’s not just the process of selling and buying, moving and unpacking. You may also have to consider new schools for any children, a different commute, plus settling into a new neighbourhood.

The cost is key too. In both cases, there are some things which feel like a spectacular waste of money, but when you move, these tend to be more expensive. You have to pay for everything from stamp duty to conveyancing costs, surveys, mortgage fees, estate agents and the cost of the actual move itself. These vary dramatically but average around £13,000. If you’re improving and staying put while the work is being done, there might be the cost of architects, planning permission, building regulations and project management. You could top £13,000 with a massive project, but it’ll usually cost less.

The cost of moving up the property ladder and the cost of the building work will vary dramatically depending on what you’re doing and where you live. As a rough rule of thumb, building new space in an expensive area will usually be cheaper than buying it, and the opposite is true in lower-cost areas. Everything else will be less clear cut, so the only way to be sure is to get some quotes and do some maths. Of course, even then you’ll need some leeway because estate agents may over-value your home to win the business, and builders may offer a low quote for the same reason.

If you have to move out of the property for the work to be done, the chances of the work paying off financially overall shrink significantly – unless you’re prepared to live in a caravan on site. Financially, it’s the worst of all worlds. You need to pay for a second property – and all the associated running costs. Plus, you have to move house – twice. With the rental market running so hot, if you end up renting somewhere else, you might be shocked at the costs involved.

You should also consider the return on investment of any renovations. There are some jobs that are generally considered to be worth the effort in most circumstances. These involve adding space, whether that’s a garage conversion, loft conversion or an extension. They will usually add more value than the cost of the work.

There are others which usually pay off: taking a property that’s deeply flawed and getting it to a state where other people would consider buying it – like structural improvements or dealing with an exceptionally dated property. There are others which can cost you more than you’ll make back, like a new kitchen or bathroom, but which make your home more sellable.

Other renovations won’t usually make their money back, like adding shutters or new carpets throughout. You also need to take care over the kinds of things that don’t add enough value to be worth the expense – like putting top-of-the-range fittings in an average price property. Keep an eye on selling prices in your immediate area too. There will be a ceiling price of the maximum that properties in your area go for, and if you spend so much on the renovations that you’d need to bust the ceiling price to make your money back, you could be in for a nasty surprise.

You might decide it’s your quality of life in the property that matters rather than the resale value. This was the case when we were adapting dad’s home to cater for his reduced mobility. Not everyone wanted a wet room, or a fancy toilet, but he did, so it was automatically going to be worth the money. If you go down this route on the basis that you’ll be there for so much longer that you don’t need to worry about what the property is worth right now, you need to bear in mind that life isn’t always predictable, and you need to consider how you’ll feel if you’re forced to sell up sooner than you’d planned.

Sometimes the decision is made for you. If you don’t like the area, there’s no scope for the improvements you need, or planning permission isn’t granted, moving should be the default option. Meanwhile, if you’re already living where you want and there’s nothing available locally that works for you, renovations may be the most sensible approach.

In the end, we were persuaded to do the work by the fact we hated sitting in the dark cave of a lounge, and living with electrics that meant we couldn’t have the kettle and the toaster on at the same time. Meanwhile, family homes in the area tend to either be 1970s 4-bedroom houses or Victorian mansions, so our budget wouldn’t breach the gap from one to the other. It was a difficult and expensive process, but so far, we’re not regretting the decision to improve rather than move. And if my exceptionally demanding family have managed to live with it, then nobody should rule out renovations entirely.

Rate cuts

The Bank of England cut rates this week, which is great news for anyone in the market for a remortgage, but less of a blessing for savers. Much of the change was already priced in, but this cut is a decent indication we can expect the rates on both mortgages and savings to continue trending downwards in the months to come.

For savers, this means keeping an eye on your savings rate and being prepared to switch. You need to keep your emergency fund in easy access savings, which are likely to drop. However, some banks will be in more of a hurry to cut rates than others, so you could more than double the rate from a pedestrian high street giant by shopping around among online banks and savings platforms. For money you don’t need for longer, this is a decent opportunity to consider fixed rate savings.

Fixed rate deals, which guarantee the rate for a specific period – from a couple of months to five years – will let you lock in a rate for the duration. These have come down from the peak, but you can still make more than 4.5% fixed for a year or almost 4.5% when you fix for longer. You’ll need to pick the right length of fix for your circumstances – or a combination of a few of them – but if rates continue to come down as expected, these deals will look increasingly attractive.