Extensions and loft conversions deliver the highest returns, while energy efficiency upgrades gain traction
Homeowners who add a bedroom through an extension or loft conversion can boost their property’s value by up to 24% in 2025, according to new research from Nationwide.
The analysis, based on the lender’s house price index, also reveals that while kitchen and bathroom refurbishments remain the most common upgrades, larger projects deliver the greatest financial returns. The study further highlights a growing trend towards green improvements, with a third of homeowners opting for energy efficiency measures such as solar panels and insulation.
According to Nationwide, 71% of homeowners who undertook improvements in the past five years focused on kitchens or bathrooms. More than two in five added a bathroom or ensuite, and a quarter installed an additional toilet. Around a third of those making changes opted for green upgrades, with over half of this group installing solar panels.
“Younger homeowners appear to be most interested in greening their homes, with over two thirds (69%) of those aged 25 to 34 who had renovated in the last five years making green improvements,” said Andrew Harvey (pictured right), senior economist at Nationwide.
“Older homeowners (those aged 55 or above) were least likely to have made green improvements (just 18%), with bathroom renovation being the most popular amongst this demographic (68% of those who had made improvements opted for this).
“Looking at other popular home improvements, 39% of homeowners who had renovated added an outbuilding, such as a shed or entertainment space, while 23% added a conservatory to their property. In terms of larger scale projects, 24% of those who had made improvements opted for a loft conversion, while 21% had a single storey extension built.”
The primary motivation for renovation was to improve the property’s appearance, cited by 54% of respondents, while 35% aimed to increase value. Modernisation and adding space were also common reasons. Only 7% renovated in preparation for selling.
The average spend across all age groups was approximately £52,000, though younger households (aged 25 to 34) spent nearly double, reflecting a greater tendency to undertake major works.
Nationwide’s research found that increasing a property’s size, particularly by adding bedrooms, has a marked effect on value. “A 10% increase in floor space, all things equal, adds 5% to the price of a typical house. But our analysis suggests that it is additional bedrooms that are key to adding value,” Harvey said.
“For example, adding space to create an additional double bedroom can add 13% to the value of an existing two-bedroom house. Homeowners that add a loft conversion or extension, incorporating a large double bedroom and bathroom, can add as much as 24% to the value of a three-bedroom, one-bathroom house.”
The research also addressed the question of necessity, noting that over half of owner-occupied homes in England have two or more spare bedrooms. However, the rise of hybrid working has led to increased use of spare rooms as offices or studies.
Energy efficiency improvements are also on the rise, driven by cost-of-living concerns and the need to reduce emissions from residential buildings. Over the past decade, the proportion of homes rated ‘C’ or higher for energy efficiency has more than doubled, reaching 52% in 2023.
Despite the costs and disruption associated with renovations, most homeowners reported satisfaction with their decisions. Only 4% expressed regret, most commonly due to higher-than-expected expenses or unsatisfactory outcomes.
“Ultimately of course, the decision to invest in a home is an individual one, which has to take into account the costs, hassle and time involved, as well as potential benefits,” Harvey said. “Our survey suggests that most are pleased with the results.”
Mary-Lou Press, president of industry body NAEA Propertymark, however, noted that there are a multitude of regulations to consider when specifically looking at loft conversions. “While most may fall under permitted development rights, if they stay within strict pre-agreed specifications, some will require full planning permission to be granted,” she said.
“Additional considerations to be aware of also include if your property is listed or sits within a potential conservation area, so it is always vital to fully check with relevant planning departments before undertaking any alterations.”
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