How to work out rebuild cost

If you’ve been looking into getting buildings insurance you may have seen the term ‘rebuild cost’ cropping up a few times. The idea of having to rebuild your home at some point might sound scary, but calculating your rebuild cost shouldn’t scare you.

As always we’re here to help you gather all the information you’ll probably need to work out the rebuild cost of your home, and what it actually means in the first place.

What is the rebuild cost of my home?

The rebuild cost of your home is basically how much it would cost to fully rebuild your home from scratch, if it was destroyed by something like a fire, flood, or the unlikely event of a plane crashing into it . Rebuild costs take into account all of the necessary materials and labour costs of putting your house back together.

Rebuild costs also usually include:

• Costs for any surveys
• Plumbing
• Electrics
• Costs for demolition and clearing the damaged parts of the house
  

Rebuild cost is different from market value because it takes into account purely the costs of rebuilding. Your house’s value is based on a range of different factors, like the value of the land, the location, or how close you are to schools and train stations. Rebuild cost doesn’t take any of these things into account as it’s purely focused on the cost of building work.

Different types of property will probably have different rebuild costs. For example, houses with loft conversions or older buildings will likely have a higher rebuild cost. We’ll go into these examples in more detail further down.

If you’re wondering how old your house is, you can check out our blog ‘How old is my house?’

Although location won’t affect your rebuild cost in terms of its proximity to a train station, where your house is in the country may have an effect. This is because of the varying cost of labour across the UK. Rebuild costs can range from around £220,000 for a family home up in Durham to over £300,000 for a similar house in London, with the UK average being around £240,000.

Why do I need to know the rebuild cost?

If your house is badly damaged, there’s a good chance you’ll want your insurance company to cover some of the costs of rebuilding. House insurance companies tend to want to know how much your house costs to rebuild so they can work out buildings insurance premiums.

It’s a good idea to be as accurate as possible in calculating your rebuild cost because you probably don't want to be over- or under-insured. If you’re over-insured, you’ll be paying too much money for your premiums, and if you’re under-insured the insurance company might not pay for the full costs of any potential repairs to your house.

How do I work out the rebuild cost of my home?

There are a few options for calculating the rebuild cost of your home. First off, you could get a general idea from some of the documentation you probably already have, just to give you a ballpark figure to work from. All of the following should be able to help in some way:

• The deeds to your home
• Your mortgage valuation report
• Home insurance policy documents from the previous owner
• The surveyor’s report from when you bought the house
  

These documents might be outdated or give only an approximate amount, so you are probably better off doing a proper calculation. There are two main ways you can calculate an accurate rebuild cost for your house:

Using an online calculator

Online rebuild cost assessments are the more affordable option for calculating your rebuild cost, as they tend to be free. They can be a bit more approximate than using a surveyor, as it relies on you to do some of the legwork. If you want to do an online rebuild cost assessment, you need to work out the size of your house in square metres, and provide a few other key pieces of information.

• Your property type (eg semi-detached house)
• The approximate age of your home
• The number of rooms
• The type of roof and walls

Online calculators need to know the external area of your house for a rebuild cost assessment. Here’s how to calculate the external area of your house easily:

• Measure the length and width of the ground floor from the outside and multiply them together
• If the upstairs is identical to the downstairs, just double the first total
• If it isn’t, you can try to measure the upstairs walls in the same way as the ground floor and just add it to your ground floor area
• If you have a loft conversion or a basement that you use as living space, these all count as floors and should be added to the calculation in the same way

Hiring a surveyor

Instead of using an online calculator, you can hire a surveyor to take care of the rebuild cost assessment. This tends to cost around £200-£300, but they are also probably going to be much more accurate than you would be on your own. The surveyor will visit your house and take care of all the necessary calculations to work out the rebuild cost.

If you have an unusual house, for example, if it’s thatched or listed, you might want to use a surveyor. Complicated building materials or historical buildings tend not to be covered by online rebuild cost assessment calculators, and a surveyor will probably give you a more reliable calculation.

If you’d like more information on listed houses, you can check out our blog ‘Listed building Home Insurance’.

Will renovating my house change the rebuild cost?

Any structural changes you make to your house like an extension or conservatory will usually affect your rebuild cost. Any additions to your house will probably increase your rebuild cost and make your insurance go up. This is because you’re essentially asking the insurance company to rebuild more than you were before you added the extension. It’s usually worth getting a new rebuild cost assessment with each new addition, as you could end up being under-insured without an updated policy.

What if I live in a flat or maisonette?

You usually won’t need buildings insurance if you’re living in a flat because your landlord would usually take care of it. Even if you own your flat, flats tend to be leasehold, so your landlord might already have buildings insurance in place. Some flat owners like to group together to take care of these kinds of things as a group, so if you are calculating the rebuild cost it’s good to remember that blocks of flats tend to be built differently to houses. This can affect the rebuild cost, so you may want to use a surveyor to get a really accurate rebuild cost assessment.

If you’re curious about flat owners grouping together, you can check out our blog ‘What is a share of freehold?’.

A few final tips…

Working out the rebuild cost of your house can be a pretty simple process, and it’s a good idea to be protected, even against extreme cases. Here are the last few things to remember:

• Rebuild costs takes into account the cost of actually rebuilding your house, not its perceived market value
• You can get a rebuild cost assessment online or from a surveyor, but surveyors tend to be better for complicated properties
• If you add an extension to your house, your rebuild cost will probably increase

Urban Jungle is not a financial advisor and information in this article should not be taken as advice or recommendation.