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 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.
Reasons to Renovate
With a good quality renovation project, you can boost the value of your home, meaning when you come to sell, you could net a nice profit.
An extension, loft conversion, or full house remodel could add value to your property by increasing its size and providing better 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 a 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 charm of historic properties, so if preserving your home's original features is high on your priority list, choose to renovate.
Protecting period character was a ‘must’ for our clients at our Farragon project. Built in 1898, great care was taken to preserve the home's Victorian significance. Wall partitions were gently cut and removed to avoid disturbing ornate cornicing, while the original timber staircase was patiently repaired. Decorative woodwork, sash and case windows, stained glass, panelled doors and picture railings were all restored.
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
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 perfectly.
Building a new home gives you the most 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.
Building a home typically uses more embodied energy than renovations. However, if your new home is made with sustainable materials and is highly energy efficient, these initial energy differences could be offset by lower ongoing energy usage.
The best-performing, energy-efficient homes are Passive Houses, which reduce a home’s energy bills by up to 75%. Passive Houses drastically cut the amount of energy required to operate a home, by taking a 'fabric first' approach, whereby the building materials and components (the 'fabric') do all the hard work.
It's much easier to integrate high quality insulation, airtightness and triple glazing into a completely new house than an existing one. Your architect can also orientate your new home to make the most of your plot’s natural advantages – for example, to maximise natural daylight and solar gain to ensure the best possible efficiency from solar panels.
If the structural integrity of your 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 financially to a knockdown and rebuild. Speak to building surveyors and make a pre-planning application enquiry with your local council to find out whether your plans will comply with building regulations.
Which is the most cost effective - renovate or build?
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.
The Cost of Renovating
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.
The Cost of Building New
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.
The average cost to build a house in Scotland is around £2500 per m². If you don't already own land, that will be additional cost, which varies by location.
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.
How Long Does it Take to Build a Home?
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.
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 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.
What About Building Regulations?
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.
The Pros and Cons of Renovating vs Building
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.
Building a Home Can Be a Complex Journey
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