Renovation - What will it cost?

One of the biggest concerns for anyone undertaking a renovation or extension project is money. How much will the building work cost? Are there any hidden extras? And is the expense justified in terms of the value it will add to the property? Without a clearly worked out budget, it is impossible to answer these vital questions, or to make informed decisions.

Developing a comprehensive budget is an essential part of the project planning process. Initial estimated figures, gleaned from looking at other people’s build costs, will enable you to plan a project of appropriate scale and ambition according to your available means.

A more detailed analysis of costs will allow you to make decisions on the specification of materials, fixtures and finishes, allowing essentials to be prioritised over luxuries. It may also be possible to plan for the work to be phased, with the essentials completed first, and fitting out of some parts completed at a later date when more funds might be available.

A budget is not a one-off calculation, but should be adjusted on an ongoing basis throughout the project. As some costs inevitably increase, others can be renegotiated, reduced or omitted to compensate. If costs come in under budget, some extra features can be brought back in. This way financial problems can be flagged up long before they become a crisis.

A huge number of disputes with builders boil down to the fact that the client has simply run out of money, and can’t afford to pay for the work they have instructed, and then looks for any reason to avoid paying. Make sure you do not end up in this difficult position, by preparing your budget carefully, making sure you have allowed for all of the costs listed here, and by leaving a contingency of 10-15% of your total budget to cover unforeseen costs. You will almost certainly need it.

A WORD ON VAT…

Most renovation work is standard rated at 17.5% but there are concessions for some types of renovation work that you should look into, including work to listed buildings, conversions, and the renovation of dwellings empty for two years or more, or where there is a change in the total number of dwelling units.

Kitchen Extension: £50,000
This new light-filled contemporary extension to an ordinary 1950s house in Berkshire cost £50,000, including the kitchen fittings

Complete Remodel: £200,000
This loft conversion, combined with a complete internal remodelling and new fittings throughout, cost the owners almost £200,000

Loft Conversion: £25,000
Creating a new room out of attic space costs in the region of £20-30,000 depending on the floor area to be converted

How to Get a Renovation Price

A Contractor’s Quote

A good way to get an estimate of renovation and extension costs is to get a few builders to take a look at the job. An experienced builder will instinctively know roughly how much your project is going to cost simply by looking at your plans and by visiting the site. Bear in mind that this is not a fixed price or quote, so don’t rely on it.

Some smaller building firms who work on an informal basis might be willing to give you a quote for the project based on nothing more than instinct, and to take on the risk of completing the project within that price. This sort of builder is often not VAT registered, will work largely for cash, and relies on their good reputation for their livelihood. If you are lucky enough to find such a builder – and they exist all over the country – this route can work out to be very cost-effective.

Unlike the smaller builder, who will work to an estimated price, a main contractor is highly unlikely to give you a totally fixed price for a major renovation project, as there are far too many unknown costs. To obtain a written quote from a builder you will need the following documents:

• Drawings – detailing the scope of the project
• Specification – details of materials
• Bill of quantities – all materials itemised
• Contract – legal document

Your Own Estimate

A good starting point for preparing your own budget estimate is to look at the build costs achieved by other renovators. Cost details are printed for every project in Homebuilding & Renovating. Look for projects that are similar to your own, taking into account when the project was completed, the location, the quality of the fixtures and fittings, the type of builder they used, and whether or not they got involved in either managing or undertaking the build.

For extension work, you can use the average build cost tables in the back of the magazine, but remember to add VAT onto the final figure at the appropriate rate if you are using a VAT-registered contractor: most renovation work is standard rated at 17.5%.

If you are completely gutting a house, starting again from four walls and a roof, then your build costs are likely to be very similar to the new build costs on the tables, with any saving from reusing the existing shell being offset against the cost of stripping the building back and repairing it. The same applies to conversion work.

Loft conversion works is slightly less expensive than new build, and so calculate this at 70% of the figures in the table, plus VAT if you are using a VAT-registered contractor.

Cost-estimating Software

You could have a go at producing your own detailed estimate of build costs, in the same way as a quantity surveyor, and there are books of tables of costs available, but this is complicated and time consuming unless you have done it before. It is a task made far easier with the aid of estimating software, such as Housebuilder XL (www.hbxl.co.uk/) or EasyPricePro (www.easypricepro.com/). These programmes are based on Microsoft Excel spreadsheets and guide you through the whole process, putting in the correct prices and quantities for labour and materials based on the tasks and dimensions you enter. This software is really targeted at contractors, and given the cost you would need quite a sizable project to justify the investment versus using a quantity surveyor to price a one-off project. You will also need detailed drawings and a specification to hand in order to get useful results. Also bear in mind that they are best for new build and extensions rather than renovation work.

Quantity Surveyor

Quantity surveyors (QS) specialise in pricing building work, and if you can find one who is used to pricing renovation and extension work, this can be an excellent way of working out your budget. Many contractors hire a QS to do their pricing. Fees for this service are typically £3-500 and the documents required are the same as those a contractor will need to produce a quote. You could use an independent QS report as a yardstick by which to assess quotes produced by other builders. You may then be able to renegotiate aspects of their quote.

If you want an independent estimate of the cost of your project, a QS can help. Fees will vary according to the scale of the job, but some will price an extension for as little as £3- 400. Visit www.rics.org/.

Subcontractors Direct

If you do not use a software package, you will need to be able to break down your project into individual trades and then into individual packages of work, with a breakdown of each task and the labour and materials required. For a smaller project this is not too complicated, especially if you are using subcontractors, in which case you can ask them to provide estimates or a quote for each package of work. Once again, the accuracy of any such costing will depend on the level of detail in your schedule of works. If you have forgotten items this can quickly lead to a significant budget shortfall. In addition to the subcontractors’ price, you will need to allow for the costs detailed below.

DON’T FORGET…

In addition to the usual fees associated with buying a property (Stamp Duty, mortgage fees etc), no budget for a renovation project is complete without a significant contingency budget. This sum is there for unforeseen costs that occur once work begins and is rarely left untouched. A figure of 10 per cent of the total budget is prudent, with a minimum sum of £5-10,000 depending on the scale of the project.

Other Costs to Remember…

Pre-project

Insurance premiums: Public liability cover should be taken out upon exchange of contracts. Contractor’s All-Risks insurance should be in place on the site once work commences, either via your contractor, or your own policy if you are project managing.

Empty buildings will require special insurance. For major extension, remodelling or conversion work it is possible to take out Structural Defects Liability insurance to protect against the risk of defective work. This kind of cover is usually charged at a percentage (typically around 1%) of the contract value.

Service connection charges: If a property is left empty for some time the services such as gas and electricity may be cut off and the meters removed. If this is the case, or if mains services have never been connected to an older property, there will be a charge payable to the utility companies.

Council Tax: Currently the maximum exemption for a dwelling undergoing renovation works is 12 months, and for an empty unfurnished property, six months, after which the full charge is payable.

Planning application fees: Current fee for an extension (Householder Application) is £135. There is no charge for listed building or Conservation Area consent.

Building Regulation application fees: Any new building work or alterations must comply with the Building Regulations. For specific details of what will or will not be covered by the Building Regulations, contact your local authority. Fees are increased frequently and vary from authority to authority.

Professional

Design fees: Simple renovation work that does not involve remodelling or alterations may not require any drawings, but most projects involve some design work. Fees can be based on a percentage of the construction cost, a package price, or an hourly rate.

Engineer’s fees: Any work that involves alterations will need to comply with the Building Regulations and the inspector is likely to ask for calculations. Expect to pay £100-200 for calculations for the size of steel joist required when knocking two rooms together and £1,000 for the calculations for an extension or loft conversion.

Surveyor’s fees: In addition to the fee usually payable for a lender’s valuation for mortgage purposes, it is important to instruct a surveyor to undertake a survey into the structural condition of the property.

Measured survey: This is an accurate set of plans for the existing building, and is the starting point for any remodelling or extension project. The cost will range from £4-600 for an average size house up to 120m2.

Party wall settlements: Any building work taking place close to the boundaries of neighbours is likely to be affected by the Party Wall Act, which is designed to help facilitate the development by creating an agreement between neighbours. A party wall agreement costs typically £700 per party involved.

Specialist’s fees: A surveyor may well recommend that specialists be called in to survey particular problems, such as damp-proofing, for which a separate fee will be payable.

On Site

Tools: If you are using a main contractor, the cost of all tools will be included. If you are using subcontractors, or doing work yourself, you may have to purchase additional tools.

Plant and hire charges: A contractor will include this in their price, but if you are project managing you need to budget for hire of diggers, dumpers, etc.

Rubbish/muck away: Building sites generate huge quantities of rubbish and waste and this has to be removed either in skips, or directly to the local tip. The type of waste also matters, as contaminated waste such as asbestos has to be taken to special landfill sites. A small skip will cost £70-90, a larger skip £120-200. Private individuals do not have to pay for tipping and so getting rid of small amounts of waste regularly can save on skip hire. Commercial tipping is subject to Landfill Tax at a current rate of £2 per tonne for inert waste, and £24 per tonne for active waste.

The spoil from digging foundations or landscaping must also be removed from site. If the waste is ‘clean’ muck, companies will typically charge £20-30 per tonne to take it away. ‘Clean’ hardcore (rubble) costs the same. Rough rubbish will cost £70-80 per tonne.

Site security and storage: If you are project managing the build, then this is your responsibility and you need to ensure the site is safe and secure, including any safety barriers, lighting and signage. You will also need to make sure that there is secure storage for materials and tools on site, plus WC facilities and somewhere with shelter for subcontractors to have their breaks.