Renovate vs rebuild

Renovating a building is not a minor project, but demolishing it and rebuilding is a major undertaking. Unless you’re able to fund the project yourself, it’s vital to get the finance in place before you make any firm commitments to buy. Talk to your mortgage provider for guidance before you take any action, whether you’re thinking of renovating or rebuilding. There may be specialist lenders who will consider funding rebuilds (in a similar way to a self-build), but this may well be at higher interest rates than standard mortgage loans and with additional fees.

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Costs can vary considerably depending on what work you’re planning. John Daborn says: “In general, a complete renovation can be more expensive than a rebuild because you have to strip everything out before putting it back. Rebuilding from scratch usually costs less.”

Bear in mind that if you’re knocking down an existing property, you will also have to pay for demolition costs, and rates vary widely. You’ll also need to factor this into your timings and consider the extra disruption to your neighbours.

Builders working on a new build will not need to charge VAT on labour or building materials as long as it’s genuinely new. It has to fulfil various criteria. For example, if a newly built extension cannot be sold separately from the main house, the VAT exemption won’t apply and your builder will charge 20% VAT.

“Don’t underestimate the cost of planning,” advises Mike Dade of Speer Dade Planning Consultants. “Planning application fees for a new dwelling differ depending on whether you’re in England, Wales, Scotland or Northern Ireland; and pre-application fees vary from council to council and depending on what level of advice you need.”

A renovation, extension or new build can cost less if you do some work yourself, but call in a professional if you don’t feel confident doing particular jobs like plumbing, and don’t underestimate the workload.

Homeowner Henry Collinge is project-managing the 36-month renovation of his 16th-century farmhouse in Norfolk. “It was in a dilapidated state and everything needed doing,” he says. “The first time it rained, we had a waterfall coming through the roof! The roofer was with us for three months. Doing the project management is taking a lot more time and effort than I thought.”

When budgeting, homeowners embarking on a renovation or rebuild should keep aside a contingency of around 5-10% – more if the property is listed, suggests Annie Summun. “Everything costs more than you think because you come across unexpected issues,” says Henry. “We discovered the chimney was unsupported. It was held up by tiles! To put in lintels cost an unforeseen £1,000.”

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Although demolishing and rebuilding a property often requires more energy than renovating it, you could make long-term energy efficiency gains by rebuilding.

“You can upgrade an old house, but there are limitations,” says John Daborn. “A Victorian brick house without cavity walls is a disadvantage if you want the heat retention you get on a new build. You can put in internal insulation, but it costs more to insulate than a cavity wall and it’ll make your rooms smaller.”

Annie Summun recommends getting a feasibility study done to assess the viability of the project, including specialist reports on conservation and environmental considerations. A chartered surveyor can help you arrange this. “If there are listed trees, you have to allow for roots not being damaged – you may need special netting to protect them and a zone around them, for example. Or there may be protected species like bats on the property, which need surveying.” See our article Confessions of a surveyor for more information on using a surveyor.

Remember, replacing an old house with a new energy-efficient dwelling won’t be enough to sway a planning application. “Although you may get brownie points because you’re going in the right direction,” says Mike Dade.

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Building regulations approval in England, or a building warrant in Scotland, is needed if you’re building or altering a property. The regulations include guidelines on complying with everything from structure to electrics. You can apply for approval from your council, in which case the fees are usually published on their website, or through a private approved inspector who will negotiate fees directly with you.

You’ll also need full planning permission to rebuild, and for some renovations if they’re extensive. (Take a look at the Extensions Beginners Guide at online magazine Homebuilding & Renovating for some useful tips¹.) A listed property cannot be demolished but, even if a house is not listed, it may not be possible to knock it down.

“If a tumbledown site is considered to have some value as a ‘heritage asset’, the council could resist demolition on that basis,” says Mike Dade. “That’s why it’s important to bring in the planner right at the start, even before an architect is involved.”

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Speak to your council’s planning department to find out what they’ll agree to, and to builders for an estimation of a project’s cost. You can find recommended tradespeople and experts through the Federation of Master Builders², the Royal Institute of British Architects³ and the Royal Institution of Chartered Surveyors⁴.

It’s also important to speak to your insurance provider to make sure you’re covered throughout any renovation or rebuild project.

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1. Building an extension: a beginner’s guide, homebuilding.co.uk
2. fmb.org.uk
3. architecture.com
4. rics.org/uk