Expanding your property portfolio is one of the best ways to increase your rental incomes, but it needs a large up-front investment. Building a loft conversion onto existing properties can be an alternative to buying additional flats or rooms. There are a lot of benefits to this approach, including lower upfront costs and better knowledge of the immediate area.
The average loft conversion costs around £13,000-£20,000 to build. If you are building a self-contained flat rather than additional rooms it will cost more to fit out, but will ultimately provide a higher income.
If you have a building team that you work with frequently, you may be able to negotiate on some of the costs to save money. Generally, the costs for a bedroom/bathroom loft conversion can be broken down to:
- £2k on insulation
- £2k on plumbing
- £1.8k on stairs
- £1.5k on labour
- £1k on glazing
- £1.2k on building materials
- £1.5k on rofing materials
- £800 on a bathroom
- £500 on decoration
Loft conversion flats in London are generally rented for £500-£1,500pcm, depending on the area and size/standard of the loft conversion. A flat won’t necessarily gain more income than several bedrooms, but if the house is already leased as a set of flats/individual properties it’s best to build a loft conversion to suit. If the bedrooms are rented individually then you could build an additional 2-4 bedrooms in the loft space and potentially double the yield from that building.
Additional Property Value
A loft conversion can increase house value by a fifth, or £37k based on 2014 figures. It also increases the appeal of a building, so rather than just gaining money you decrease the amount of time taken to sell your building and release the money tied up in your property.