London flat renovation - Am I being totally ripped off?

[Hattie]

Hi all - I'm hoping to get some advice on the below!

We are currently in the process of renovating our 1 bed basement flat in London (zone 2). We have received planning approval to remove the old conservatory at the back of the house and replace it with a flat roof structure which will house the kitchen. This involves altering the internal layout of the flat as shown in the floorplans. The footprint of the house is staying exactly the same, it is 600sqft for reference.

To complicate matters, our flat flooded during the flash flooding in London last summer so it has currently been stripped back to brick as part of the insurance repair works and drying out process. The flat is now completely dried out and we have put the job out to tender.

We have just received quotes from builders to put the flat back together as per the proposed plans. When we received the quotes, I literally fell off my chair. The three quotes were: £270k, £353k and £403k. I am honestly in a state of shock. I'm fully aware that London building costs are unlike anywhere else in the country and that the cost of raw materials has shot up this year, however, these are on another level. I could buy another flat for that last quote!

All 3 builders that quoted were aware of the fact that part of this work will be covered by our insurance claim. However, the majority of it won't be i.e. the removal of the conservatory, the change of layout etc.

Am I being totally ripped off because they are aware it's an insurance job? I can't understand how someone can physically spend that much money on a 600sqft flat when the footprint of the house isn't changing and we aren't building any new walls! Unless I was coating every ceiling in gold leaf!

Any advice would be much appreciated!

[SteamyTea]

Your place is slightly bigger than mine is 48 m².

You could buy up 3 of my neighbours houses for that.

 

Yes, you are being ripped off.

Edited July 5, 2022 by SteamyTea

[Carrerahill]

There will be an element of the builders adding an insurance company mark-up and then just rip-off London prices.

 

The prices are high, but what portion of that is for the insurance company to pay?

 

I would first find out what the insurance elements are and then speak to the insurer and see if they spit out their coffee. Maybe they will think that is fine, but they are used to being ripped off.

 

Car repair shop I know, £150 a panel for paint, £250 a panel for repair and paint. If through an insurance company it is £4000 a side for paint and they will "only do a single side to get a good blend" more for crash damage. 

 

The chap who does the work will paint in a panel and you cannot see the difference as he uses the in house paint mix system and even ages paint etc. to suit. The whole side re-spray and "blend" thing is just a made up industry thing to rip off insurers. Maybe on a small ding blow-in but not a full panel of paint. Anyway, I digress, but you get the point. 

Edited July 5, 2022 by Carrerahill
Spelling

[Russell griffiths]

33 minutes ago, SteamyTea said:

 

Edited July 5, 2022 by Russell griffiths

[Indy]

London prices always seem to be in their own little world and bear little resemblance to what the online guides or even SPONS will tell you.

 

However, that price does seem extortionately high. 60 sq m at £3k per sq m gives you £180k. I've deliberately chosen that number as most people seem to be self build from scratch at £2k, though I've factored in access restrictions and the higher costs due to it being a basement flat. Even at £4k per sq m -  you only get to £240k, which is still lower than your lowest priced quote.

 

I'm sure people dig out basements from scratch and then finish for £4k per sq m, so your refurbishment job should be a lot cheaper really. 

[Ferdinand]

Staying slightly non-direct I note that:

 

1 - Is that not more than building a brand new one?

2 - The area has technically changed, since a conservatory is not part of the house aiui - Estate Agents would not include it in the liveable space, for example, normally.

 

Hmmm.

 

3 - Is any of this related to flood protection measures that are expensive?

4 - Are you going to find yourself uninsurable?

5 - It is going to be tricky handling your bit and their bit, and how to separate them so that you are not on the hook for insurance company rates for your bit.

 

F

[Hattie]

1 hour ago, Carrerahill said:

There will be an element of the builders adding an insurance company mark-up and then just rip-off London prices.

 

The prices are high, but what portion of that is for the insurance company to pay?

 

I would first find out what the insurance elements are and then speak to the insurer and see if they spit out their coffee. Maybe they will think that is fine, but they are used to being ripped off.

 

Car repair shop I know, £150 a panel for paint, £250 a panel for repair and paint. If through an insurance company it is £4000 a side for paint and they will "only do a single side to get a good blend" more for crash damage. 

 

The chap who does the work will paint in a panel and you cannot see the difference as he uses the in house paint mix system and even ages paint etc. to suit. The whole side re-spray and "blend" thing is just a made up industry thing to rip off insurers. Maybe on a small ding blow-in but not a full panel of paint. Anyway, I digress, but you get the point. 

We're working through the cost split with the insurance company at the moment. Essentially, they will pay to put everything back how it was. Anything to do with the layout change or extension, we have to pay for. If I had to guess based on the quotes we've seen so far, it'll roughly be a 50/50 split but because these quotes are so outrageous, I don't know how accurate that is! 

 

 

[Hattie]

1 hour ago, SteamyTea said:

Your place is slightly bigger than mine is 48 m².

You could buy up 3 of my neighbours houses for that.

 

Yes, you are being ripped off.

My thoughts exactly... I'm from the north west and I could buy multiple houses back home for that!

[Hattie]

31 minutes ago, Indy said:

London prices always seem to be in their own little world and bear little resemblance to what the online guides or even SPONS will tell you.

 

However, that price does seem extortionately high. 60 sq m at £3k per sq m gives you £180k. I've deliberately chosen that number as most people seem to be self build from scratch at £2k, though I've factored in access restrictions and the higher costs due to it being a basement flat. Even at £4k per sq m -  you only get to £240k, which is still lower than your lowest priced quote.

 

I'm sure people dig out basements from scratch and then finish for £4k per sq m, so your refurbishment job should be a lot cheaper really. 

That comparison is helpful, thank you! Even with access costs, the prices still seem outrageous. 

 

20 minutes ago, Ferdinand said:

Staying slightly non-direct I note that:

 

1 - Is that not more than building a brand new one?

2 - The area has technically changed, since a conservatory is not part of the house aiui - Estate Agents would not include it in the liveable space, for example, normally.

 

Hmmm.

 

3 - Is any of this related to flood protection measures that are expensive?

4 - Are you going to find yourself uninsurable?

5 - It is going to be tricky handling your bit and their bit, and how to separate them so that you are not on the hook for insurance company rates for your bit.

 

F

Hey F 

1 and 2 - It was included in our floorplan space, seems to be the norm for London estate agents. But yes, technically it wasn't a permanent structure but we are now making it into one. 

 

3 - No flood protection measures are included in the costs. It's not on a flood plane, but was due to 3 months of rain in 1hr back in July 2021!

4 - I hope not but I will cross that bridge when we come to it!

5 - Yep this is what we're trying to work through now, it's very complicated. Even though I'm not paying for the insurance parts, I still want to haggle the overall quote down as much as possible as I just detest knowing that we're being had off, especially if it's going to impact our building insurance rate in the future. We have spoken to the insurance company and they said building costs in London are the worst they've ever been and in some cases they are extending people's temporary accommodation for another year to wait for costs to (hopefully) come down! I 

 

I just wish we could've got these quotes without the contractors knowing it was an insurance job. However, this was impossible due to the tender process we had to follow. 

[SteamyTea]

At those types of prices, you could employ a couple of builders yourself (maybe recent college graduates) and tell them what needs doing.

[nod]

A breakdown of the quote wold help 

Basements in or out of London an be very expensive 

Especially one that is at risk of flooding 

[Ferdinand]

I'm not sure if I would be encouraging you to go down this route, but have you considered asking the insurance company for a cash settlement at lower than the lowest quote, and you organising it? Or taking the 2** and selling the flat as reno after minimum work to stabilise / treat.

 

I've done that once after a water leak many years ago. But my total claim was only about 10k.

 

Ferdinand

[LaCurandera]

Option 1 - cash settlement and you top up
Option 2 - Have the insurance do the full job on their dime, then you follow on with your work separately. Looking at the plan there's the internal wall to the from room, and the back structure. So doing all the other works that the insurer will cover (like bathroom, flooring, plastering), you're not losing much of it when you make your changes. Splitting it also gives you a jumping off point, as if the insurers builders are good, you can ask them to carry on with your works. If they aren't, or you don't fancy investing, you can cut and run without outlay. 

I'd vote option 2, personally.

[saveasteading]

11 hours ago, LaCurandera said:

Option 2 - Have the insurance do the full job on their dime,

agreed. otherwise it can get very complicated. This will get your place back to a fit state, and no complications of proving where the money is allocated, or getting conflicting advice and slowing the works.

Id think the insurance company would prefer it for the same reason, as there is scope for moving costs from one bill to the other.

 

As a contractor, insurance work is not great. There are delays in decisions and usually in payment, too many parties to please, and a lot of risk of unknowns. so they will all sensibly add money for these.

Plus it is London. Medway towns and their equivalent in  all directions, emit hundreds of white vans into London every day, entailing at least 2 hours on the road which you have to pay for.

[TonyT]

How much does it cost to park 1 van outside per day?

 

 

Times every subcontractor that’s bound to add up!

[JamesP]

32 minutes ago, TonyT said:

How much does it cost to park 1 van outside per day?

 

 

Times every subcontractor that’s bound to add up!

In Lambeth CPZ it is £23.10 per trade vehicle per day.

[saveasteading]

5 hours ago, JamesP said:

Lambeth CPZ it is £23.10 per trade vehicle per day

And that won't be outside the property. 

[HughF]

Park on double yellows outside, get the ticket, stick it on the bill. 
 

I know that’s what Thomas Nagy used to do in rbkc. They’d only ticket once, you’d have the van outside all day, and it was reduced to £30 within 30 days or something. Less than a days parking.

[SteamyTea]

43 minutes ago, HughF said:

Park on double yellows outside, get the ticket, stick it on the bill. 

What they do in St. Ives.  Costed in at the start of a project.

[saveasteading]

17 hours ago, HughF said:

Park on double yellows outside, get the ticket, stick it on the bill. 

Careful! don't think they can't tow it / hoist it away without you noticing. They can be slick, and on a bonus.

[bmj1]

I'd like to give some friendly advice:

• Negotiate for the largest cash settlement you can today. You've had 3 quotes for the work, and you think they are toppy. I would share the top 2 quotes with the insurer and use this as your basis to negotiate a settlement.
• You can then decide what you want to do with that cash. You could sell the property as-is and buy something else. You can invest the money in the property. You've got options.
• It sounds like your quotes were toppy, the good news is you don't need to accept them. Once you have a cash settlement you can bring in new builders to quote..

[Marvin]

7 minutes ago, bmj1 said:

I'd like to give some friendly advice:

• Negotiate for the largest cash settlement you can today. You've had 3 quotes for the work, and you think they are toppy. I would share the top 2 quotes with the insurer and use this as your basis to negotiate a settlement.
• You can then decide what you want to do with that cash. You could sell the property as-is and buy something else. You can invest the money in the property. You've got options.
• It sounds like your quotes were toppy, the good news is you don't need to accept them. Once you have a cash settlement you can bring in new builders to quote..

Hi @Hattie

 

In my humble opinion....

 

To me, @bmj1 suggestion sounds like the least complicated and gives you the most control.

 

You could deal with the mess one step at a time:

 

Agree and recieve the money from the insurance company.

 

Add that to your build fund figure, deduct 20% from the total for contingencies, and now you have the budget you need to use to be able to do all the work and  EVERYTHING associated with the work that has not already been paid for.

 

If you can obtain quotes for the full cost of the works that total less than the budget figure then your in the right area. If the total eats into the 20% contingency then you have to be very careful about additional costs.

 

One of the easiest ways to over spend is by making changes as you go along. Know as much as you can about what you want.

 

Good luck

 

M

[bmj1]

12 hours ago, Marvin said:

Hi @Hattie

 

In my humble opinion....

 

To me, @bmj1 suggestion sounds like the least complicated and gives you the most control.

 

You could deal with the mess one step at a time:

 

Agree and recieve the money from the insurance company.

 

Add that to your build fund figure, deduct 20% from the total for contingencies, and now you have the budget you need to use to be able to do all the work and  EVERYTHING associated with the work that has not already been paid for.

 

If you can obtain quotes for the full cost of the works that total less than the budget figure then your in the right area. If the total eats into the 20% contingency then you have to be very careful about additional costs.

 

One of the easiest ways to over spend is by making changes as you go along. Know as much as you can about what you want.

 

Good luck

 

M

 

Just to add to my earlier post, I'd also add a 10% contingency on top of the builders quotes when going out to bat with the insurer for a settlement.

 

The worst they can do is push back - but I'd anchor the settlement figure as high as possible - and 10% contingency isn't unreasonable, especially right now given inflation...

 

[Marvin]

8 hours ago, bmj1 said:

 

Just to add to my earlier post, I'd also add a 10% contingency on top of the builders quotes when going out to bat with the insurer for a settlement.

 

The worst they can do is push back - but I'd anchor the settlement figure as high as possible - and 10% contingency isn't unreasonable, especially right now given inflation...

 

Also are the prices estimates or quotations? ( a quotation a non fluctuating price for the works or an estimate that allows the price to change.)