Budgeting for a house extension, refurbishment or new build home

What costs are involved in a building project?

There are a number of costs you need to consider so make sure your architect arranges for a cost plan at an early stage and advises you what costs to make allowances for.  Costs should be reviewed at feasibility stage when you are weighting up different types of development, at planning permission stage to make sure the design submitted to the council is affordable and prior to tender to make sure the detailed specification is in budget.

·      Build cost.  This is the sum the builder will charge including overheads and profit and preliminaries (the cost to set up and run the site).  Check what is included and if any costs aren’t fixed, be aware what these are.

Hampton Home -Borough of Richmond upon Thames Deep retrofit/ extension.  The house was an empty bungalow.  As it had been empty for two years, only 5% vat was due on the building works.

·      VAT.   VAT will be charged on the build cost, so make sure you find out if quotes for the works and consultants are inclusive of VAT.  At present VAT on an extension or refurbishment stands at 20% - quite a sum, so make sure this is factored in.  New build homes are 0% VAT on the build, but not on fixtures and fittings.

·      Contingency  Always allow for a contingency.  Depending on the size of project this should range from 5-10% of the build cost.  This is to cover any unknowns at the time of tender, e.g. in an old house the timber structure may have some rot.  It there are provisional sum items in the tender (an allowance rather than fixed cost) or client supply items the cost for these is unlikely to be fixed.  The contingency figure is there to cover these sums.

·      Consultants’ fees. You may want to employ a design and build company (who has an in-house architect or technician and structural engineer) or have an independent architect manage the project.  A design and build company will charge lower professional consultant fees, but you are locked into one company before the house is fully designed so the price won't be fixed and often with limited design choices. An architect is employed by you and is independent of the contractor.  They will advise you in detail on the process, generally spending longer on the design options and project manage the design and construction phase through to completion.  They can advise  which consultants you need and can tender to a number of contractors so you have a competitive price.  

You  will need a structural engineer and possibly party wall surveyor and sustainability designer if you would like renewables for your home.  You will need a quantity surveyor to draw up a cost plan to ensure the project is in budget at an early stage.

·      Surveys. You will need a measured CAD survey of the existing house or site to allow the design to be developed and then priced from these drawings. You will likely need a drainage CCTV survey and/ or asbestos survey.  Your architect can arrange quotes and liaise with the surveyors as head of the project team.

·      Interior finishes/ Landscaping. Make sure you allow for  a budget for interior lighting/ curtains/ blinds/ furniture.  You may want to allow for an interior designer to design and organise these or take on the fit out yourself.  Landscape design input may also be required.  Some architect’s services cover interiors and hard landscaping.  At Sophie Bates Architects we can offer interior lighting, joinery, kitchen and bathroom design along with interior wall and floor finishes. We also work with local landscape contractors and design any hard landscaping, e.g., external terraces and lighting - to allow the interior to flow into the garden.

Integrated landscape design.  Wimbledon Home. Hardlanding and layout by Sophie Bates Architects. Planting by Barnwell Gardens.     Light House, Putney landscaping : Charlotte Rowe

·      Site set up . You will need to take our insurance for the building works on your home, and the contractor may have not included in their price.  For example -  electricity use, parking permits or skips. Check the small print for what is not included.    

How much will my project cost?

Costs have been increasing sharply over the last few years, but there are signs that these are slowing down, even dropping for some construction materials.  The tables below (source Weaver / ONS) show that some material prices have peaked.  

Source - Weaver June 2023.

The charts show the cost of steel and ply dropping from a high last year. Other materials are still increasing but close to inflation at 13% in the last year.  Inflation is dropping but it is very unlikely building materials will get cheaper across the board.  It won’t cost less to delay extending or refurbishing.  The tables show since 2015 materials have increased by 33-89%, the average is 47% increase in 8 years. 

On the ground, there definitely seems to be much greater stability in supply chains and material availability, allowing suppliers to increase the time a quote is valid for and hold more in stock.

Contractors in SW London and Surrey still seem pretty busy, but  less so than last year, and will likely become more competative as the market slows.  Speak to an architect to start planning your new home now as you will need between 6 months and a year before works commence on site.  They will work with  quantity surveyor can work together to ensure the design is in budget so you have your design in place ready to tender and get the best price.