[spoonie]

You usually can’t build wealth or increase the value of a single home much. The physical house depreciates, but the land it sits on increases in value due to factors outside of the owner’s control. You are right though, that it’s a tax-free way of saving, and you can keep trading up using the gains and the leverage you have.

[papermule]

I’m not sure about that. A lot of people purchase run down homes and renovate them, often selling these homes for good profit. That’s not due to the increasing value of land?

[zapperdapper]

Yes you are right. What my mate often does is add value through renovation and/or extension. For example, one house was very run down and was on a large plot of land. He renovated the main house, and extended it, building an extra bedroom and detached garage. He then divided the land and built a new house on a separate plot. Then sold both houses. His net profit was around £150K I believe. Other projects are smaller, such as just a straight renovation. On his current personal house he bought it for around £350K - it was very run down. He lived in a caravan on site for 18 months while he renovated and extended. He has since extended twice, and converted the barns into living accommodation. Estimated value now is around £2million. He owns another property outright that he rents out. Rental income around £1,400 a month net. That property is worth around £500K I would say.