Cost of Renovating vs Building a New Home

Many clients ask whether it's better to renovate their home or build a new one. There's no universal right answer. It depends on major considerations, including how happy you are in your home, how you feel about your current location, your financial goals and future plans. The most important thing is to carefully consider what each option offers, so let's start by looking at the top reasons to renovate.

The cost of a construction project is a major determining factor. Deciding between building new or revamping your space often comes down to your financial circumstances.

Clearly, straightforward projects like adding loft space, a bathroom renovation, or kitchen renovation can be completed for much less than a new build.

However, the average price of a whole-house renovation, which includes stripping out, reinsulating, reframing, levelling floors, replacing windows and doors, bespoke kitchens and bathrooms, new roof, additional plumbing and rewiring, can be comparable (if not more expensive) than building from scratch. This is because there's a lot more labour involved in taking the home apart, before putting it back together.

There's also a greater chance of coming across unwelcome surprises. Asbestos, or problems with structural elements can be uncovered, which can quickly make costs rise.

At our Farragon renovation, our team noticed the hallway floor moving under foot. Lifting it, we found the joists precariously propped up on large stones, requiring the entire floor to be replaced.

Keep aside a contingency budget of around 10% - more if it's a period property or historical building. Anyone who has ever gone through a major renovation process will tell you the final construction cost is always higher than anticipated.

Renovation work also attracts 20% VAT. There'll also be expenses like professional fees, (architects, chartered surveyors, project management) local authority costs and rent if you need to move out while building work takes place.

A new build project is typically easier to plan and budget, and in some cases, they're cheaper to build per m² than a complete renovation.

Builders working on a new build won't charge VAT on labour or building materials, which is a considerable saving. The VAT exemption means you can spend all of the budget on your home rather than giving away 20% to the taxman.

If you're knocking down an old home and rebuilding, you will also need to factor in demolition costs, which can vary substantially.

While the answer to this can vary depending on size, complexity and site conditions, most home building projects take between 8 – 14 months to complete.

Building a home is a time-consuming process, and the myriad of decisions you make about materials, fixtures and fittings will have a lasting impact in your new home, so it’s crucial to work with an experienced project management and construction team who can efficiently guide you through every step.

Small renovations are faster to complete, due to the pre-existing building structure, which means less work for your building team. Typically, a basic bathroom or kitchen renovation takes up to one month.

When it comes to fully renovating historically significant or period properties, project durations can span well beyond the time it takes to build a new home, especially if there are harmful materials like asbestos which need removing.

The Coldwells Build team spent almost two years stripping out, remodelling and reconfiguring our Farragon project. Given the property was built in 1898, there were several unforeseen issues which forced plans to change and pushed back completion dates.

It's important to ask yourself these questions before embarking on a renovation process:

• What happens if the project runs over time?
• What's the plan if the project runs over your desired budget figure?
• Will you live in the property while renovating it? This can make things tricky with trades professionals coming and going. Could you afford to rent somewhere else if not?

If you're doing the work yourself, the renovation process can be done on a rolling basis. Not all projects need to be done at once. Consider starting with a bathroom renovation before moving onto other rooms as your time and budget permits.

In Scotland, if you're building a new home, or undertaking any house renovation work that will alter, extend, convert, demolish or change the structure of your home, you will need to apply to your local council for a Building Warrant.

If you're not sure whether you need a Building Warrant, ask your local council's Building Standards service. You should always check with your council, even if the work is minor. By doing this, you'll avoid costly home renovation mistakes, like being fined or ordered to remove new building work.

You will also need full planning permission to build a new home, and for some renovations if they're extensive. Average prices for planning and building warrant applications can be found on your council's website.

Don't jump the gun on knocking down an original house on your land. There's no guarantee your planning authority will approve a demolition and rebuild.

For example, you can’t knock down and replace a listed property, unless it can be shown there's no viable alternative. If consent is granted, there are likely to be limitations as to what style and size of property you will be allowed to build.

In summary, the right decision between building a new home or renovating will depend on many personal, key considerations.

Overall, building a new home offers a clean slate and more control – you can customise your home to your exact needs. However, it could take longer to achieve than a basic renovation or house extension.

With a renovation, you’ll be somewhat bound by the existing structure. However, if you’re just looking to do cosmetic work (without changing internal floor layouts and structural elements), renovating will be the less costly option. Just remember to have a contingency budget.