Replacement Dwellings

ABOVE: This stunning contemporary home in Poole was built in the place of a tired dormer bungalow which took up a spectacular waterfront site.

Most houses, whatever their form of construction, have a finite life. It can be extended by careful restoration, in some cases almost indefinitely, but, for the most part, at some stage there’s very little more to do other than to replace it with something better.

In 2005, 74% of new homes created were built on land that had previously been developed and 17.5% of the total were built on gardens or former residential sites. In the south-east corner of the UK, the number of homes built on gardens or former residential sites was 30% of the total.

All of which gives credence to the oftrepeated advice that one-for-one replacement is perhaps the best way for self-builders to obtain a plot.

What's the Real Attraction?

The attractions are multiple. When and if you extend or renovate an existing dwelling, even one of architectural merit, you have to pay the full 17.5% rate of VAT on all labour and materials. If you opt to demolish that building and build anew then the new build is zero rated. You don’t pay VAT on any labour or supply-and-fix contracts, and whilst you do have to pay VAT out at the 17.5% rate on any material purchases you might make, it’s virtually all recoverable at the end of the project. This 17.5% differential can, and often does, make it uneconomical to consider restoring a building.

The truth of the matter is that much of the existing housing stock is of little architectural worth. It does not conform to modern requirements for energy efficiency and, in many cases, the accommodation and facilities provided do not accord with modern life. To extend or convert these dwellings often means that the necessary compromises, in design terms, mitigate against the provision of a substantially improved home. Much of the housing stock built in the 1960s and 70s, and perhaps into the 80s, is of such poor construction and design that their ‘sell-by date’ is well in advance of much older houses.

The plots of many older houses, including those built less than three decades ago, tended to be much bigger than the plots that we’re prepared, or have, to put up with today. Some quite small bungalows were often built on huge plots and it’s not at all unusual, even in the Home Counties, to come across a tiny 90m² property on a one-acre plot.

Whilst in a very few cases the previous development of the site might impinge on the costs, in most the very fact that the previous home is of substandard or flimsy construction means that the advantages of previous occupation far outweigh that possibility. The driveway and road crossover may already be in. The plot will already be fenced. The garden may well be landscaped, and with careful thought those features can be preserved for the new home. The services, including gas, water, electricity and, most importantly, sewage connection, are probably already in and operating, meaning that, in most cases, no new connection is necessary. These and the fact that there’s no need for expensive work within or to the highway can mean that up to £10,000 of infrastructure costs are already accounted for.

ABOVE: When the new owners of a 1920s bungalow found that they would have to spend a small fortune underpinning it in order to build the extension they envisaged, they decided that demolition and rebuild was the best option. The planners agreed, and the resulting Georgian-style home was built in just eight months....Read more about this project.

So Is It Always Worthwhile?

Not always. What you pay for the ‘plot’ is, of course, crucial. With a ‘greenfield’ plot the value of the plot is established by a direct correlation and as a proportion of the value of the proposed new house. With a replacement dwelling there is always the complication of the residual value of the existing property.

In most areas there is a dearth of bungalows and one coming onto the market, even of substandard construction, will attract considerable interest — especially if it has a better or bigger than average garden.

Whilst most readers of Homebuilding & Renovating will appreciate the advantages of removal and replacement, much of the homebuying public have no such understanding. Many homes that should have been demolished long ago are still dragged on for a few more decades by well-intentioned but entirely inappropriate extension; an extension that in many cases costs much more than the added value granted by the extra accommodation.

So, what the potential self-builder needs to be able to find are those plots where either the existing property is of such insignificant value that what one’s really looking at is a plot, or else the plot where the existing property is so out of kilter with the surrounding or potential values that replacement is really the only option.

Of course, estate agents dealing with the first of those categories would know that what they were marketing was a plot and they would value it accordingly. But it is still possible to find plots in the latter category, where even the agents don’t realise that the full potential lies in knockdown and replacement. That can be a good thing if the price being asked still reflects a reasonable profit to be made from replacement. But if they insist on thinking of the existing property in full market values, despite of, or ignoring, its defects, then the margin can be tight. The trick there is to see how or whether you could get more on the plot than most would envisage, or even in some cases, whether the plot is actually big enough for more than one unit.

ABOVE: When the owners of a modest bungalow decided to extend, they knew they wanted something out of the ordinary. They approached a local architect who came up with an ambitious scheme that, he decided, would be easier to create by starting from scratch rather than renovating. Their existing home demolished, the owners now live in a stunning four bedroom home. Read more about this project.

The Planning Issues

Policies vary from one planning authority to another. Some local authorities have restrictions in place that limit the size of any replacement dwelling and relate it to the size of the original. In some cases this can be that the new dwelling is no bigger than the existing. Others may allow a certain percentage increase over the size of the existing; this can vary but is often between 20% and 50%.

The moot point is the size of the original. If the existing property has not exercised or taken up its full Permitted Development Rights then one could argue that any consideration of size should take into account the extra accommodation that could have been provided. In the final analysis one could, theoretically, extend the existing building and then insist that any new property was the given percentage greater than the extended whole. But that would be frightfully expensive and, if one ended up demolishing newly built sections, rather wasteful.

But it is possible, as long as you do things in the right sequence, to use the existence of Permitted Development Rights to get more than the simple percentage increase over the original. Take the case of a simple rectangular bungalow. You need to apply for planning permission for a house or bungalow adjoining or close to the footprint of the existing that fulfils the local authority’s size criteria. Having got that consent you can then put it to one side and exercise the Permitted Development Rights for the existing property. You build a detached garage or an outbuilding, ancillary to the enjoyment of the property such as a snooker room situated five metres from the existing building. You then extend the existing dwelling by the permitted amount of 15% (volume). And if you’re careful, when the old bungalow is demolished, these new sections will find themselves adjoining the new dwelling.

Furthermore, if your Permitted Development Rights are unimpaired, then you can probably extend again once the new building is finally finished.

Once again, if the Permitted Development Rights of an existing bungalow have not been impaired, it is usually possible to extend into and occupy the roof. This can be used to increase the size allowance for any replacement dwelling. You should always, of course, check the status of the Permitted Development Rights on a property before you intend to go down this route, as they may have been removed or already used up.

Never assume that one-for-one replacement is an automatic right. In most cases, planners can be persuaded of the virtue of something better than that which exists. But it is not a foregone conclusion.

Never demolish the existing property until or unless you have the planning consent. You cannot apply to replace something that is no longer there and if you jump the gun on demolition in an area such as green belt, where new development is precluded, then you could end up with nothing.

ABOVE: This new 325m² timber framed home in Cheshire sits on a long but narrow halfacre heavily sloping site that used to house a run-down 1940s prefab bungalow less than half of its size. It took six months for the owners to convince the planners to approve plans for a replacement, which features three storeys to maximise the available space for development.

The Cost of Demolition

In most cases, the cost of demolition should be fairly minimal, with a small bungalow costing between £2,000 and £5,000 to remove. This can, however, rise up to £20-25,000 for larger properties. In some cases the cost will be significantly reduced by the presence of ‘salvage’, where the company undertaking the work has the right to take the materials for selling on as architectural salvage. Those building extensions to existing houses are often keen to use second-hand and ready-mellowed materials that won’t stand out, and whilst many new bricks are, for example, priced at around £250/1,000, some second-hand bricks retail at twice that amount.

In most cases, foundations of existing houses are not going to affect those of the new home. Most new homes have foundations that are a minimum of 1.2 metres deep, whilst much older housing has foundations less than 600mm deep. Indeed, insubstantial foundations may well be the primary reason for replacement being the best option.

Self Builds on Replacement Dwellings:

• An Oak Frame Home Built on a Replacement Dwelling
• A Three Bedroom Oak Framed Home
• A Contemporary Self Build wth a Basement

Further reading:

• When is a Plot Not Really a Plot?
• The Essential Plothunter's Checklist
• Site Specific Solutions for Problem Plots
• How to Make the Most of an Awkward Plot