Cost of Renovating vs Building a New Home
Which project is the most cost effective? Which is the fastest to complete? We look at some of the key elements to help you decide whether to renovate or build from scratch.
Many clients ask us whether it's better to renovate or start fresh with a new build. Unfortunately, there's no simple answer. It all comes down to personal preference—how satisfied you are in your current home, its location, your financial goals and future plans. The key is to weigh the pros and cons of each option. So, let’s start by exploring the top reasons to consider renovating.
Reasons to Renovate
Adding Value
A well-executed renovation can increase your home's value, potentially earning you a profit when it’s time to sell. Adding an extension, loft conversion, or a complete remodel can enhance your property by increasing space and improving functionality.
If profit is your goal, avoid making your renovations too personal. Keep an eye on who your buyer is likely to be. The more bespoke your renovations, the narrower your market.
Before diving in, establish that a renovation will definitely increase your property's value. Consult local estate agents about which projects are profitable, make use of their cost calculators, and research average property prices online.
You Love Your Current Location
42% of people interested in building their own home believe that finding a suitable plot is one of the biggest obstacles they face. Many self-builders spend at least a year searching for the ideal site.
Plot hunting can be like finding a needle in a haystack, which is why many people choose to stay put and renovate their homes instead. For those who love their neighbourhood, but want additional space or an updated look - a renovation or house extension makes more sense than building new elsewhere.
To Preserve Architectural Charm
It's impossible to replicate the authenticity and character of historic properties, so if preserving your home's original features is important to you, choose to renovate.
Protecting period character was a ‘must’ for our clients at our Farragon project. Built in 1898, we took great care to preserve the home's Victorian features. Wall partitions were carefully cut and removed to avoid disturbing ornate cornicing, while the original timber staircase was meticulously repaired. We also restored the decorative woodwork, sash and case windows, stained glass, panelled doors and picture railings.
The home was modernised throughout, including reconfiguring the ground floor layout. Yet Farragon still retains the traditional spirit of a period property.
Reasons to Build
Let’s dive into the key reasons why building a home might be the best choice for you.
Design Freedom
One of the main arguments for building new is the design freedom it affords – the opportunity to create a home which suits your family and lifestyle.
Building a new home gives you control over how it will look and function. The project can be tailored to meet your needs – from its size and layout, to energy efficiency and parking.
When renovating, the existing structure limits the changes that can be made. While you can certainly move walls, add extensions, and reconfigure floor plans, you won't have the design freedom of a blank canvas.
Energy Efficiency
Energy-efficient homes often come with a higher upfront cost than those built to standard U.K. regulations, primarily due to the need for high-quality materials, certified components and skilled construction professionals.
For instance, homes built to the Passivhaus standard—recognised as the world's leading low-energy and comfort standard—typically incur costs that are about 4-8% higher.
However, when you consider that a Passivhaus can cut heating bills by 79% compared to homes built to current Scottish regulations, along with lower maintenance costs, reduced carbon emissions, enhanced comfort, health benefits and increased market value – the investment is clearly justified.
Building a Passivhaus is a spend to save approach. By investing now, you’ll save big over the lifetime of your home. Additionally, building a low-energy home is far easier and more efficient than retrofitting an existing one.
Structural Integrity
If the structural integrity of a property is so poor that it's verging on unsafe, then a knock down and rebuild is likely the way to go.
This was the case with The Arbor House, a modern, minimalist home built by Coldwells Build in 2022. It replaced a dilapidated 19th century stone coach house, which was plagued by chronic damp, rot and woodworm. As a nod to the past, a stone wall from the original building was preserved and incorporated into the home's outdoor colonnade.
Get as much advice as you can before committing to a knockdown and rebuild. Make a pre-planning application enquiry with your local council to find out whether your plans will comply.
Which is the most cost effective - renovate or build?
Deciding between building new or refreshing your space often comes down to cost.
The Cost of Renovating
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 structural problems can be uncovered, which can quickly make costs rise.
During our Farragon renovation, our team discovered that the hallway floor felt unstable underfoot. Upon lifting it, we found that the joists were precariously propped up and supported by large stones, necessitating a complete replacement of the floor.
Keep aside a contingency budget of around 15-20% - potentially more if it's a period property or historical building. Anyone who has ever gone through a major renovation 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, surveyors) local council planning costs and rent if you need to move out while building work takes place.
The Cost of Building New
A new build project is typically easier to plan and budget for, and in some cases, it can be more cost-effective than a full renovation.
Contractors working on a new build won't charge VAT on labour or building materials, which is a considerable saving. This VAT exemption allows you to allocate your entire budget toward your new home rather than paying 20% in taxes.
Other costs to consider when building a new home:
Remote Locations
The location of your building plot can impact the overall project cost, especially if you're in remote areas like Scottish islands. In places like these, contractors may not be readily available, meaning they have to travel long distances to reach your site. This adds to the costs due to accommodation and travel expenses.
Sloped Sites
Sloped sites are notorious budget busters, often demanding a split-level home, or extra digging, filling and levelling. It’s worth getting a topographical survey to make informed decisions on house position, access and the amount of groundworks required.
Ground Conditions
Extremely boggy or rocky ground could bump up costs. A boggy site could lead to drainage issues and may require deeper excavation and filling with imported hardcore. Larger rocks will need breaking up and any surplus removed from site.
If you’ve found a site you want to buy, make sure to include a condition in your offer that lets you assess the ground conditions before finalising the purchase. This way, if the conditions are unsuitable for development, you'll have the option to withdraw from the purchase or renegotiate the price.
Site Access
Buying a cheap site that needs a long access road worth £40,000 can be a false economy. A level access road over a short distance is more economical.
Connection To Services
The availability of services like water, electricity and telecoms/broadband can affect the cost of developing a building plot. If your chosen site isn’t already hooked up to these services, it will cost extra to extend existing connections or install new ones. In rural areas, you might need to invest in a private septic tank or treatment plant if you can't connect to a mains sewerage system.
Demolition, Asbestos and Contaminated Land
If you’ve bought an existing building, will it need to be demolished before your new home can be built? If so, this will need to be factored into the cost, along with skip hire and removing waste from site. If asbestos is present, a specialist contractor will be required to remove this safely. Similarly, if you're building on land previously used for agricultural or industrial purposes, there may be contaminated ground. This would mean removing the top layer of earth and disposing of it properly.
How Long Does it Take to Build a Home?
The timeline for completing a home building project can vary based on factors like size, complexity, construction method, and site conditions. However, in our experience, most projects typically take between 8 to 14 months to finish.
How Long Does it Take to Renovate?
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 is asbestos which needs 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:
– What happens if the project runs over time?
– What's the plan if the project runs over your budget?
– 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?
Keep in mind that you can tackle a renovation step by step. There’s no need to complete every project at once. You might start with a bathroom renovation and then progress to other rooms as your time and budget permit.
The Pros and Cons of Renovating vs Building
In summary, choosing between building a new home or renovating depends on several personal factors.
Building a new home gives you a fresh start and greater control, allowing you to customise it to your specific needs. However, this option may take longer than a simple remodel or house extension.
With a renovation you’ll be somewhat bound by the existing structure, but if you're focusing on cosmetic updates without altering internal layouts or structural elements, it can be a more cost-effective choice. Just be sure to set aside a contingency fund for any unexpected expenses.
Building a Home Can Be a Complex Journey
Where to start? The builder? The plans? The land? Schedule a free call with us to benefit from our award-winning, professional advice.
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