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The dos and don’ts of property renovation

  • Kitchens and bathrooms can add value
  • Factoring in the costs of your renovation can help you avoid overcapitalising
  • It’s important to ensure you’re covered should damage occur while work is taking place
  • Remember to review your home insurances post-renovation to avoid underinsurance.

Thinking of doing some home renovations? If so, you’re not alone – renovations are becoming increasingly popular. In the three months to September 2020, there had been almost 30,000 approvals granted for alterations and additions to private residences – the highest amount for that same period for four and a half years1.

A well thought out project can add long-term value to your home. Do it on a whim, and it could be an endless source of regret.

But, whether you’re thinking about a full home renovation, a new kitchen or bathroom reno, there are several things to consider before swinging that demolition hammer.

Do: Understand why you’re renovating

Mother and daughter painting a wall of their house togetherWhen renovating a house, what should you do first? Well, that depends on why you’re renovating. If you’re renovating to sell in the short-to-medium term, it can be a good idea to focus on the areas that are going to add immediate value – a bathroom renovation or kitchen renovation, an additional bedroom or exterior improvements can both add value and increase appeal.

If you’re renovating your long-term home, consider focusing on the aspects that will improve how you use and enjoy the property.

Don’t: Get sentimental

It can be challenging to separate the emotional and rational sides of any decision to renovate. After all, you may have created memories in that home, and the emotional pull of that first day as a homeowner, a married couple or a parent can weigh heavily.

However, it’s important not to let your heart control your head. Weigh up the pros and cons of renovating versus moving, so you know for certain the renos are worth it.

Do: Factor in all of the costs involved

To do that, you need to weigh up the actual costs of renovating, which can include:

  • architect’s fees
  • council approval
  • rent if you can’t live at home during the renovation
  • builders’ costs
  • materials, fixtures and fittings
  • demolition costs
  • costs of electrics, gas or plumbing fixtures
  • any additional work outdoors post-completion, such as landscaping.

It’s a good idea to make sure your budget includes all of these and add a buffer in case unexpected costs crop up.

Don’t: Overcapitalise unintentionally

Overcapitalisation can happen when you take a loan out to improve your home, but the amount you end up owing in total is greater than what the property is worth – meaning you may not be able to recoup the money invested into the home if you sold it.

If the property is a long-term home, then some people may be comfortable with overcapitalising – if you’re renovating to sell, however, it could be counterproductive.

Do: Consider calling in the pros

Depending on your level of renovation expertise, you may be tempted to do it yourself, or call in the pros. Either way, depending on your renovation, you might need council permission. However, there are some tasks you really should call the professionals in for. And when you do, make sure their insurance is up to date and covers everything you need it to.

You should also give your insurer a call. Your home and contents insurance policy may not cover losses arising from renovations, alterations, additions or repairs.

Don’t: Forget to review your insurance

It’s important to review your home and contents insurance before any work commences. Tell your insurer you’re planning on carrying out some renovations, and explore what you’re covered for. Policies may not cover any loss or damage that occurs as a result of renovations, while others may depend on the type of renovations being carried out, for example, you may not be covered if the roof is removed. Also, remember to review your insurance cover after those renovations are complete as the replacement cost of your home may have changed.

If you don’t update your insurance, you could be underinsured. This is when the insured value is lower than what it would cost to rebuild it – so if something happens to your home, you might not have enough cover. You can use our calculator to help you estimate the right level of cover.

Find out more about QBE Home and Contents Insurance.


1 https://www.abs.gov.au/statistics/industry/building-and-construction/building-approvals-australia/sep-2020/87310DO035_202009.XLS.xls

The advice in this article is general in nature and has been prepared without taking into account your objectives, financial situation or needs. You must decide whether or not it is appropriate, in light of your own circumstances, to act on this advice.

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