14th March 2023
Unmodernised property has always been popular with investors, as it offers a way to buy prime real estate at a lower price. For those who are able to put in the work to renovate the property, this can unlock considerable gains on the resale market.
The lower selling price of a typical unmodernised property – commonly known as a ‘fixer upper’ – can also attract buyers who plan to live there for some or all of the time, as the refurbishment process is an opportunity to put a personal stamp on the place.
In this guide we will take a closer look at what defines unmodernised property, as well as some of the considerations to take into account when deciding what work to carry out before moving in or placing the property back on the market.
There’s no strict definition of ‘unmodernised’ but in general, it refers to characteristics of the property that are outdated, out of fashion or in a state of disrepair.
Some common examples of this include:
In some cases it is the property itself that is clearly unmodernised; in others, it may be that neighbouring properties have all had similar extensions, loft conversions or other modernisation, leaving the unmodernised property as an exception.
‘Unmodernised’ typically relates to undesirable characteristics. Sought-after features such as original Victorian sash windows are old but not necessarily detrimental to the value of the property; in fact, many buyers will pay more for them.
There are several reasons to invest in unmodernised property:
Put your own personality into the renovation work and ensure that your new home is fitted out with fully up-to-date appliances, giving you the best energy efficiency and comfort, while benefiting from the lower selling price of an unmodernised prime property.
If you are determined to live on a very sought after street taking on a fixer upper may be your best way in. Eaton Square in Belgravia is one of London’s smartest addresses and homes there don’t come up for sale very often. Black Brick helped a north American client find a duplex apartment in need of some work – and negotiated £1m off the £7.3m asking price too.
Bring a neglected residence up to modern standards and sell at a profit. This is ideal for investors who are able to do the modernisation work themselves, or who have existing relationships with tradespeople who can carry out the work.
Rent the modernised property instead of selling immediately. This allows ongoing rental yields to generate profits, which might otherwise be reduced by costs like stamp duty when selling quickly.
No matter what you plan to do with your property over the short, medium or long term, unmodernised properties have their advantages and can be an excellent way to generate substantial yields and/or capital gains.
Renovating unmodernised property is certainly a good way to add value, but there are market dynamics that can contradict this.
Generally speaking, unmodernised property offers the best value when:
In periods of poor supply, and particularly in prime locations, the difference in price between unmodernised properties and fully modernised homes can be quite small, and high costs of labour and materials can further erode the value unless you’re able to do the work yourself.
Finally, make sure you check for any restrictions on carrying out renovations to the property. There may be reasons why you cannot convert the basement into habitable space, or remove interior walls, all of which can prevent you from doing the work you would like to do to the building.
If you think the market overall is in a favourable position to make some quick gains by bringing an unmodernised property up to modern standards, then the only remaining question is what to buy.
A good property search consultant will be able to help you find unmodernised property at a competitive price. This is an artform in its own right. In many cases, outdated properties have not changed hands in decades, so there may not be data from recent sales to indicate the value of the property.
By working with a prime property search consultancy like Black Brick, you can benefit from expert advice to help you find a property with the potential you are looking for, in a desirable location, and without paying over the appropriate market value to acquire it.
From there, it’s a case of obtaining any necessary planning permission or, for permitted works that don’t need any special authorisation, hiring a skip and getting to work.
Some of the best ways to add value to unmodernised property include:
Identify the features you want to retain, such as sash windows and decorative friezes. If you will be carrying out reconstruction work around these, make sure they are well protected and that everyone working on the job knows that they need to stay in place. Black Brick recently helped an American family buy a London base in Marylebone. They were very keen to live in a traditional, period building and were happy to take on work. We found them a beautiful £5.5m flat in a landmark building on Park Crescent, Regent’s Park. That worked out at £2,171 per sq ft – renovated homes in the same building sell for £3,000-plus.
And, since they were grounded because of the pandemic, we also assisted them in carrying out a renovation.
By far the best way to increase value is to add floor space to a property. That can be via a basement or loft conversion, a one or two-storey extension, or by removing internal walls to create an open-plan living area.
Five years ago Black Brick helped clients upsize from a flat to a house in Kensington. They were very focussed on finding somewhere they could add value to and we found them a super off market house on Bedford Gardens. It came with planning consent to add a new basement level, side and rear extensions, and convert the loft – almost doubling its size.
They paid £4.85m for the house in 2018 (against an asking price of £5.95m). Although the project they took on was considerable the house is now back on the market for £18m.
Energy efficiency and environmental performance are important not just for altruistic reasons, but also to keep properties comfortable all year round. Improve insulation, heating, double or secondary glazing, and any integrated appliances.
If you plan to sell the property at a profit immediately when the work is completed, make sure to use a neutral colour scheme throughout. This will allow buyers to move in without the need to redecorate, but will also give them the choice to add colour where they want it – all of which increases the potential sale price of the property.
To discuss the potential of unmodernised property investment or to start your search for an unmodernised property in a prime location, contact Black Brick today and our property search consultants will be happy to help.
We would be delighted to hear from you to discuss your own property requirements. For a non-obligatory consultation, please contact us.