Maximising Your Renovation Budget: 4 Common Costs to Expect and How to Minimise Them
Renovating your home is a big project to undertake. While the goal is to spruce up your home, a home renovation project can come at a high cost. If you’re not careful with your spending and you don’t do your due diligence, home renovation could put a dent in your savings. If a home makeover is something that’s overdue, you should find a way to maximise your hard-earned money and still achieve the upgrade you want.
Whether you’re thinking about renovating your kitchen, living room, or bathroom, there are a number of ways you can get the best bang for your buck. In this article, we’re going to discuss common renovation costs, including Australian approval fees, as well as tips on how you can make the most out of your renovation budget.
More Australian home-owners are choosing to renovate
According to a study, renovation activities and spending has hit a three-year high. The number of homeowners choosing to do a renovation increased by 44% in 2021 (as compared to 2020). In 2022, nearly half of the correspondents of the study (49%) planned to renovate their homes while nearly two-fifths (39%) planned to decorate.
The annual renovation spending for homeowners is increasing year after year. In 2019, the median spend was around $20,000. It increased to about $21,000 in the next year, and to $ 30,000 in 2022, with around 82% of the home renovators saying that they have funded their renovation using their savings.
Why most Australians choose to do home renovation
What prompts homeowners to do a home improvement project? There are a couple of reasons why. In most cases, homeowners do plan to update the style of their homes eventually. Some other reasons include:
More affordable than buying a new home
With the current rising prices of houses, home renovation is more affordable than buying a new house. According to some estimates, it’ll take about 10-15 years for an average saver to build up a 20% home loan deposit. A simple repainting of the walls, for example, plus a bit of redecorating, are friendlier to the budget than saving for a second home.
Home upgrades could mean different things. It could mean turning your home into a smart home with smart appliances. It can also mean making more space or building a second bathroom to make getting ready in the morning faster and easier. If your current home is your forever home, you definitely want to enjoy it and live in it comfortably.
Addressing a safety issue
In some cases, homeowners choose to renovate to fix problems. Fixing a leaking roof, a cracked foundation, a damaged water heater, or cracks on the siding, and addressing wood rot are just some of the most common household repairs that can be addressed through renovation.
Prepare your house for sale
There are homeowners who are getting their houses ready to be sold. Renovating the kitchen, bathroom, or living room, can significantly increase a home’s market value.
What types of costs are involved in home renovations?
Renovating a house can involve various costs, depending on the scope of the project and the desired outcome. It is essential to factor the following costs into your renovation budget. Here are five costs that are commonly associated with renovating a house:
The cost of materials used in renovating will depend on the scope of the project, the quality of the materials you want to use and which room you’re choosing to renovate. Here’s a list of the most common material costs for renovation and tips on how to keep them as low as possible:
- Flooring: choosing laminate or vinyl flooring will typically be cheaper than hardwood flooring.
- Cabinets and countertops: this major expense for bathroom and kitchen renovations can be lowered by choosing more budget-friendly options such as laminate or solid surface countertops over high-end materials such as granite or quartz.
- Paint and wallpaper: this cost can be kept to a minimum simply by choosing basic paints over premium paints and possibly keeping wallpaper to a minimum as it can be a significant investment (maybe implementing a feature wall instead of wallpapering the entire room).
- Lighting fixtures: lighting fixtures can make a big impact on the look and feel of your home, however, can come at a large cost. Make sure to look around before purchasing as different places will offer different prices (Tip: look at prices online, it is easier than trying to visit every lighting store!).
- Appliances: Purchasing new appliances may be necessary when upgrading a kitchen or laundry room. Buying them on seasonal sales or even on Facebook Marketplace can be a good way to keep these costs as low as possible.
- Plumbing fixtures: These costs will largely depend on the quality and style you choose. Finding a good balance between cost and quality will be important.
Labour costs will depend on the scope of the project, the experience level of the tradespeople you hire, and the location of the project.
Some common labour costs to take into consideration are:
Our top tip for keeping labour costs within a reasonable range is to do your research and gather quotes from multiple sources before hiring. You can then compare the services offered and decide which is best for you.
Determining a budget beforehand is also important. When you have a set budget in mind, your perspective right from the start will be spending only on what’s necessary to finish the renovation. You’re focused only on the expected renovating costs and preventing yourself from spending more than you have. Also, remember to communicate this to contractors and suppliers to ensure everyone is on the same page.
As an option, you can even try doing some of the work yourself. You never know how much you could be saving by painting some extra walls yourself! Plus, it is a fun job for the kids to do over the weekend!
It is important to check with your local council or registered private certifier for the approvals you may require before starting to plan your renovation.
In Australia, you may need the following approvals before commencing:
- Complying Development Certificate (CDC)
- Development Application (DA) or Development Consent
- BASIX Certification
If you want more information about these approvals, using the NSW Planning Portal is a good place to start. By searching ‘Renovation approvals’ you can find out if your renovation requires approvals and how much this may cost. Our tip is to get expert advice and services to help with approvals as this will avoid any documents getting rejected and accruing more costs in the future.
Unexpected renovation costs
Renovating can be exciting but often also a stressful experience as unexpected costs may arise that you didn’t include in your budget. Unexpected renovating costs may include:
- Structural issues
- Electrical and plumbing issues
- Asbestos removal
- Building permits
Our top tip is to take into account unexpected costs in your renovation budget. A general rule of thumb is to budget around 10%-20% of your total renovation cost to account for any unforeseen expenses.
Talk to Vision!
A home improvement project can be daunting especially if you crunch the numbers and see how much you have to spend for it. However, if you approach this project in a smart way, you can keep costs within your renovation budget, still have enough in your savings to feel secure, and end with a home that you enjoy living in for years to come.
If you need more advice on the best way to fund your home renovation, contact Vision Property & Finance today. You can ask an adviser for a plan or strategy that can financially ready you for your big home renovation project.
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