Renovating? Should you add value or do what makes you happy?

Major renovations can cost a small fortune, so before we start, we need to know that it's worth the effort. Any keen renovator needs to know that the changes will either add enough value to their property to make the cost worthwhile, or improve their quality of life enough over the years they are in the property to pay off. Fortunately, researchers have crunched the numbers.

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Return on investment

The first part of the project, by Zopa, was to identify those improvements with the best return on investment. In other words, those that will pay off when you come to sell your house. It found that the most valuable change you can make is a loft conversion, which costs an average of £23,700 and produces a profit of £16,480 (once you subtract the cost of the improvements from the increase in the property price). That's a return on investment of 70%.

In second place was a wholesale redecoration of the property - which sees an average layout of £13,240 and an average profit of £8,180, and returns 62%. In third place was building an extension, which is the most expensive change at £30,240, but returns a profit of £17,090, so has a return of 57%. The rest of the top five is completed by a new bathroom - with a return of 53% and a kitchen at 51%.

Best for the homeowner

The second part of the study looked at the changes that brought the most joy for homeowners, and the results looked very different. The loft conversion was actually the least popular of the renovations - at 2% - a low point only otherwise achieved by adding a conservatory. Extensions were also unpopular - with homeowners only scoring it 5%.

The change that homeowners said would improve their life the most was a new kitchen - at 25%, followed by wholesale redecoration at 22% and a new bathroom at 12%. Even investing in windows and doors or the garden scored better than the extension.

What should you do?

The most effective renovations, therefore depend on what you actually plan to do. If you intend to stay put, then your priority has to be to improve the property for yourself - so decorating, installing a new kitchen and bathrooms - and possibly investing in windows and doors - makes sense.

For those who are keen to add value at the same time, the best balance appears to be in decorating, which adds value and improves life for homeowners. There's also scope for improving the kitchen. The return on investment for a brand new kitchen may not be as exciting as other changes, but you will usually cover your costs.

But what do you think? What improvements would most appeal to you? Let us know in the comments.