With the British market deep in a slump, many owners are deciding to stay put and add space to existing homes rather than face the tortuous task of buying and selling. But how do you go about deciding which improvement will work best for you, your home and your finances?

There are a myriad of ways to squeeze extra space from a dwelling but not all are feasible, or financially viable. Obvious choices are loft extensions to create extra bedrooms, extending kitchen, dining or living areas to create more living space, or even adding a garden structure to create work or leisure areas. But without knowledge of building costs or local planning constraints, it's hard to know where to begin.

Stephen Smith formed Betternest to help owners assess their property's potential, give advice on planning implications and costs, and even point them towards architects. For a fixed fee of £495, owners get a detailed property report, saving money on fruitless planning applications. "The vast majority of UK homes will be able to carry out improvements under existing permitted development rights, but most people are unaware of this," says Smith.

A qualified architect, Smith has experienced frustration with planning departments who fail to inform homeowners of changes they can make without costly and lengthy planning applications, and is sceptical about the Government's intention to simplify the process for homeowners. "What they intend bringing in is actually permitted development rights, which the vast majority of British homeowners already have," adds Smith, who finds that 95 per cent of enquiries match existing homes on their database, negating the need for home visits.

A survey of around 600 homeowners by moveme.com found that bigger property is the main motivator for today's movers, with over a third citing this as the main reason for their last move. Charles Wasdell, director of moveme.com, says: "Our survey found that the most common reason people have for moving is still the desire for more space, which means that, despite the current slowdown in the housing market, people still need to move home."

This was the reason that Kerry and Angie Walters sold their three-bedroom house in Kingston, south west London, where they'd lived for 10 years with their three children. The property had a low pitched roof which wouldn't give them enough space even with a loft conversion. They sold and bought a nearby three bedroomed Thirties house because they saw potential for additional space.

Angie explains: "We couldn't move far because Tom had just started secondary school, but there were a few four- and five-bedroom houses within our price range," she says. "I went to view this house without Kerry and thought he'd hate it because it was stuck in an Eighties time warp, but he instantly saw the potential to extend." Initially the Thirties brick-built house had an unappealing interior but its large garden and well-proportioned reception rooms convinced the couple to make an offer. "I immediately started sketching out ideas for a new layout, which would involve extending sideways and to the rear. I knew exactly how we could change the house to give us all the space we needed," says Kerry.

It took three years for the couple to save enough to fund the project but planning permission was automatic as the plans were designed to be allowable within permitted development. Despite their tight budget, they have transformed a standard three-bed property into a spacious five-bedroom home that incorporates something for every member of the family.

The flank wall of the house has been moved out to increase the living space and a two-storey side extension adds all the daily areas the family could need. The Walters' relationship with their builders was good, and the project did not run over budget, but one thing they weren't prepared for was the upheaval. "At first I thought we could all carry on living here, and even bought camping equipment to use when the work started," says Kerry. "Clearly I was crazy because it was obvious that it would be impossible for us to stay in a house with no mains water and all the dirt and disruption, as well as being totally unsafe for the children. We ended up moving out and renting a local flat for the duration."

The build project took six months and cost £150,000 but has given all members of the family the individual space they craved. Two extra bedrooms were also added, and it has increased the value of their home by around £385,000. Previously used as storage space, the garage is now a spacious playroom. The existing sitting room at the front of the house is now a tranquil chillout room, while the former dining room and kitchen have been combined and extended to create a spacious kitchen/ dining/family room with folding, sliding glass doors opening onto the rear garden, bringing light and space to the entire downstairs floor.

Caron Bronson, editor of Move or Improve? magazine, sees an increase in owners who prefer staying put and making improvements rather than moving: "We started the magazine after discovering a strong market for people who prefer to stay in their house and tackle projects which give them the extra space they need rather than sell up and start again. Many people are tied to an area either because they love it or for schools." The current market downturn means that more owners are opting to improve rather than move, and Bronson's mailbox includes letters from owners at all stages, from first-time buyers who want to do the work themselves, through to empty nesters looking to employ specialists to produce high-end finishes for properties where they intend staying permanently.

The website www.moveorimprove.co.uk has plenty of tips and costing examples of projects such as loft conversions and extensions which create spacious open plan interiors. These are still the most popular, says Bronson, who recommends attending renovation shows for specific access to expert advice.

A building project may give you that much sought after space, enabling you to remain longer in a much- loved home but, if you're uncertain how long you may want to own the property, calculating its end value is vital says Jo Eccles, of London search company, Sourcing Property: "When considering a conversion, it's important to calculate whether it will actually add value. For example, a basement conversion costs on average £300 per square foot, so in order for it to add value and compensate for the disruption, you need to be able to achieve approximately £500 per square foot when you eventually come to sell it."

Some agents warn against over extending properties, which can make them appear "top heavy" or lose valuable garden space. Search agent Robert Bailey says: "Although extending your home can undoubtedly add value, the scale of the project must be in keeping with the original size and style of the property. There is no point adding five additional bedrooms if the sitting room and kitchen are tiny. Similarly, consider the size of the plot. A big family home needs a garden large enough for children to play in."

Betternest: 0800 840 4154; www.betternest.co.uk. Sourcing Property:020-7244 4485; www.sourcingproperty.co.uk. Robert Bailey Property:020-7352 0899; www.robertbaileyproperty.com. Move or Improve? magazine www.moveorimprove.co.uk www.moveme.com

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