Why listed properties can be a costly folly

Doing up a listed property sounds like a pleasantly romantic idea, but can end up with more than you bargained for. Sarah Moore explains.


A pleasing idea but do your homework
(Image credit: compassandcamera)

Doing up a listed property sounds like a pleasantly romantic idea. You buy a small piece of history, along with all the quirks and original features that go along with it, and do your part in maintaining it for future generations.But unfortunately the process can prove far more stressful and expensive than most people imagine.

It is "vital for buyers to go into a purchase with their eyes open" when it comes to the costs of owning a listed property, says James Pickford in the Financial Times. To get an idea of how much work needs to be done to the property, it's a good idea to have a survey carried out by a building surveyor who specialises in historic buildings.

Unfortunately, while alterations to listed properties were not subject to VAT until 2012, that concession has now ended. However, certain work attracts a lower VAT rate, such as barn conversions or energy-saving alterations. Make sure you factor in on-going costs, such as heating a property without double-glazing (which is often not permitted in listed properties), and specialist insurance.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Just because a property is listed does not mean that you have to retain every single original feature. Local councils are aware that houses need modern bathrooms, kitchens and heating systems if people are to live in them comfortably. But conservation officers are required to ensure that inappropriate work is not carried out, notes Pickford. Importantly, this means that you may become liable to put right any inappropriate renovations carried out by previous owners thatcome to light in new inspections hence the importance of a thorough survey before purchase.

Finally, be aware that it's often harder to get a mortgage for a listed property than for a more modern house. Your mortgage lender will want to ensure that it could resell the property easily in the event of repossession, which may not be as easy with listed buildings, given that they are likely to have a smaller pool of potential buyers. You may have to shop around for a mortgage at specialist providers and are likely to pay a premium in the form of a higher interest rate.

A checklist before you buy

Find out what the building's grading means for your renovation plans. There are three levels in England and Wales: I, II and II*. Grade I-listed buildings will have more restrictions than those that are Grade II and II*. Scotland breaks properties into categories A, B and C, while Northern Ireland has grades A, B+, B1 and B2.

Prepare for a long planning-application process. Listed building consent and standard planning permission fall under separate umbrellas some proposed works will require just one, both, or neither. You may want to seek advice on what is likely to be permissible from a body such as the Society for the Protection of Ancient Buildings.

Be aware that when carrying out work you may be limited in the kind of materials that you can use. It is likely that planning officers will require you to revert to the original materials and methods, which are usually more expensive and labour-intensive than modern techniques.

It's often more straightforward to make an addition to listed properties, rather than to knock down or alter something that already exists. But keep in mind that it's likely that extensions will still have to be implemented in keeping with the style of the existing property.

Make sure you budget for the cost of insurance. You will probably require specialist insurance to cover risks that are more prevalent in listed buildings, such as an increased fire risk from a thatched roof.

Sarah is MoneyWeek's investment editor. She graduated from the University of Southampton with a BA in English and History, before going on to complete a graduate diploma in law at the College of Law in Guildford. She joined MoneyWeek in 2014 and writes on funds, personal finance, pensions and property.