When taking out insurance for your Buildings & Contents, you need to make sure you’ve got the right level of cover in place to replace everything if the worst were to happen. For your contents, it can be slightly easier to understand the amount you need, as you could go round your house with a calculator and add up the value of everything you own. However, working out how much it would cost to rebuild your home is a bit more complex and requires specialist input. We talked about how to go about this in our Guide to Buildings cover here, but in this post we’re going to look at what goes into a rebuild calculation.
Buildings valuations are based on what it would cost to completely replace a property, factoring in things like demolition and clearing the site, re-construction costs, and any local authority of professional fees that might be incurred in the process of designing and building a property today.
That is to say, if your house burnt down and you had to go to a contractor with a plan for a new home, how much would they charge you for everything that needed doing. This is unlikely to account for any potential price rises in the future that could be incurred given the potential length of the building project.
There are some considerations that make up this total value:
In most cases of total loss that would require a complete rebuild of the property, there is likely to still be parts of the structure left that need removing before re-constructions can commence (e.g. after a fire). This is why typically anywhere between 5 and 20% of the rebuild value is for demolition. This depends on a number of factors, such as location, type of structure, and any site restrictions.
The bit that we all think of as making up the rebuild value. The rates used in this calculation are typically on a price per square metre basis, and are based on the Building Cost Information Service (BCIS) rebuilding guide, produce by the Royal Institute of Chartered Surveyors (RICS). This will include appropriate amendments to consider specific construction features of the individual buildings and quality of finish.
For example, if you live in a mid-terraced house and it burns down, there is a high chance that the fire will have spread to your neighbouring properties. In this case, the rebuild value will have to account for potentially rebuilding some or all of those neighbours’ homes as well as yours.
Rebuilding a house usually means reinstating it in modern day equivalent materials, which means it will be subject to today’s regulations like planning laws and any environment requirements. A common change to building methods would relate to energy performance. For example, a relatively ‘modern’ 1970s building may have some insulation, but if it were to be rebuilt today it may require thicker walls or more expensive energy efficient services/alterations to get it to meet current standards.
Listed buildings may cause the opposite problem. Where listed buildings must be reinstated, they typically must use the original method of construction, which will cause a substantially higher rebuild cost due to specialist methods for things like wood frames or thatched roofing.
This will vary massively depending on the property, but sometimes the rebuild cost won’t just include the home itself. It may also need to extend to other boundary structures or infrastructure services.
Building a house, even if it’s re-constructing one, will require extensive planning, design consultation, management of the works, and fulfilment of statutory obligations. This all costs money, and is usually equated similarly to the demolition costs at around 5 to 20% of the rebuild cost.
Lastly, it’s worth noting that the rates for building work or professional fees will vary drastically between regions. The difference between Scotland and Central London can be as much as 30%.
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