Estimating Build Costs

Estimating the cost of your renovation is a fundamental part of the planning process but can be very difficult, as there are always a number of factors so prices are very project-specific.
Factors include the size of your house, the level of your own involvement, location, materials and then the specific list of works that need to be done. Using these factors, one can start to formulate rough build costs.

In order to get started when estimating build costs, there are a number of sources for advice. Firstly, we recommend picking up a copy of Homebuilding and Renovating - they post a table of costs in every issue that estimates the build cost of your project based on location, square metres and the type of builders involved (DIY, subbies, main contractor etc). The table is based on information supplied by the Build Cost Information Service (part of RICS). Of course this is just a rough estimate but it is at least a starting point. For example, using this table for a project in Greater London of around 75-80sqm, the table estimates the following figures:

Main Contractor: £115,000

Builder and subbies:£110,000

Subbies: £105,000

DIY+Subbies: £85,000

Of course, the table does not outline what works are included but it is based on a full refurbishment or average sized extension.

Homebuilding and Renovating also provides two other, more detailed ways to estimate costs. The first is the My Building Project Estimating Service (www.mybuildingproject.co.uk), a full analysis of your costs based on specific plans. Prices start at £199. There is also an online Build Cost Calculator at www.homebuilding.co.uk/buildocosts which can be used for free advice.

For more detailed information, refer to this Article.

Of course the best way to get an estimate would be to submit the same Schedule of Works to a number of builders or contractors to see the range of prices that professionals would offer - however, this is very difficult to estimate until the Schedule of Works is quite specific. Many clients ask us what we think the cost of their renovation will be - it's one of the first questions asked and obviously of high importance but it puts us in a difficult situation where we can normally only offer a range estimate or show a case study of a previous, similar project. We advise our clients to view as many case studies as possible and to keep in mind a budget when entering this stage, as ultimately it's the Client's budget that defines the Schedule of Works. Unless you are planning on going the DIY route, it's always advisable to work with at least one professional, such as an interior designer, architect or surveyor - your interior designer or architect can guide you through the entire process and make sure you know the costs clearly - often, people overlook costs that would be spotted by professionals and costs rise above the expected. Check with your designer, but often designers pass on their trade discount to their clients and the savings accumulated more than make up for the designer's fees! Not to forget that your project will also be designed and dealt with by professionals who take the stress of budgeting and managing off your shoulders. 

If you are planning a renovation, we suggest you get in touch with us for a site survey and brief discussion on your building requirements so that we can give you a free cost estimate.

Resources: Homebuilding and Renovating

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Can you save £1000's in VAT?

There are no figures for how much Value Added Tax (VAT) is over-paid by home improvers on building work in the UK, although it is undoubtedly millions of pounds.
It’s surprising how few people, including building contractors, subcontractors, designers and even HMRC staff, are aware of how to apply the correct VAT rate on building work… unless you want to hire a specialist VAT advisor, it’s best to rely on yourself.
It’s down to you to find the correct rate – if you overpay, you won’t be refunded if tax was wrongly collected in the first place.


Renovation: Domestic building work, including repair, maintenance and improvement (RMI), is usually a standard rate of 20% VAT. If you employ VAT-registered builders, they will charge the standard rate, unless you can prove that the work is eligible for either a zero-rate, or the reduced 5% rate.
The exception is if you are undertaking a conversion project that creates a new dwelling – in this case, there is a special scheme that allows you to make a one-off refund of input VAT (HMRC Notes and Claim Form VAT431C).
The only way to reduce the amount of VAT you pay on ordinary home improvement work is to employ a non-VAT-registered builder, whose turnover is less than the threshold (£77,000 per annum). If they are not registered for VAT and do not provide a VAT registration number, they must not charge VAT, so their labour costs will be 20% less.

Dwellings empty for longer than two years: If the property being renovated has been empty for more than two years, the project is subject to VAT at the reduced rate of 5%. This applies to repairs, alterations, the construction of associated garages and hard landscaping. All eligible labour and materials supplied by a VAT-registered contractor must also be charged at the reduced rate. A non-VAT registered builder must not add VAT to the supply of labour and materials, but will still charge you for the VAT paid on any materials at 20%, which you will not be able to recover in any way.
Therefore, to minimise the VAT paid, think carefully about who supplies your materials – usually, working with a VAT-registered builder (saving 15% on labour and materials) works out better than saving 20% VAT on just the labour.

Dwellings empty for longer than 10 years: If the property being renovated has been empty for longer than 10 years, it is treated as a new dwelling created by conversion, and is therefore charged at the reduced rate of 5% VAT. If you are eligible for the VAT Refund Scheme, you can also claim back the VAT paid on any eligible materials at the standard rate of 20%.

Converting a non-residential building into a dwelling: The rules for first-time conversions of non-residential buildings are the same for dwellings that have been empty for 10 years or longer.

Converting a mixed use building: Where any part of a building is being converted that has been used as a dwelling before, for instance a pub with accommodation above, it will not be possible to recover the VAT on the building work, as the ultimate sale will be VAT exempt as an existing dwelling, rather than zero rated as a new dwelling. However, the reduced rate still applies if the building has been empty for two or more years.

Change in the number of dwelling units: Where renovation work to a building in residential use results in a change in the number of dwelling units – for example, dividing a house into flats – the work involved is eligible for the reduced 5% VAT rate.

Renovation and alteration of listed buildings: The repair of listed buildings is a standard rate of 20% VAT. ‘Approved material alterations’ to listed buildings were previously zero rated, but this relief will end on 1st October, 2015 following the Finance Bill approved in July 2012. This excludes projects for which planning permission was submitted before 21st March, 2012.

Energy-efficient materials: The supply and installation of some energy-efficient materials, such as insulation and renewables, is eligible for the reduced 5% VAT rate. The reduced rate can be applied to the following work, together with some kinds of associated work, when undertaken by a VAT registered installer:
- controls for central heating and hot water
- draught stripping
- insulation
- solar panels
- wind turbines
- water turbines
- ground-source heat pumps
- air-source heat pumps
- micro combined heat and power units
- wood-fuelled boilers
If you have your own VAT registration, you can self-supply energy efficient materials and recover the balance of VAT of 15% if you also undertake or manage the installation, but the likelihood is that many materials will be installed by specialists.

New dwellings: The supply of new dwellings is zero rated for VAT and to the supply of eligible labour and materials involved in the construction. Any work undertaken by a VAT registered contractor must be supplied at the zero rate. A new dwelling created by building above or on to an existing building or buildings, including buildings in residential use, can still apply if it is ‘independent’.

VAT refund scheme: the VAT refund scheme allows self-builders to reclaim VAT on most purchases of materials on eligible projects. Only one claim is permitted and it cannot be submitted until the project is complete. The completed building must be a principal place of residence for you or your relatives, it must not have planning conditions preventing its separate sale or separate use from another property, and it must not be for business use. The claim process is quite complicated, so it may be worth employing a specialist to prepare the claim – someone who has experience on preparing claims knows the system and achieves the best outcome.

VAT registered self-builders and self-supply rules: for self builders or renovators who have their own VAT registration it may be possible to self-supply materials and recover the VAT on any eligible materials at the appropriate rate through your own return.

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