How to budget for development in London?

[sansserif]

Hi all

 

I'm looking at a few houses in London for potential to redesign and renovate into something special for my family home.

 

The opportunities I'm interested in tend to look like:

• Terraced/end terraced houses of 120-150sqm gia
• Planning potential to expand by another 50-100sqm gia, either via a side or rear extension
• In need of a full remodel - moving interior walls, evening out half-levels etc.
• Sometimes an existing basement that could be finished into a utility/gym space -- or even expanded.
• Opportunity for loft conversion, or a crappy existing loft conversion from 30 years ago.

 

I'm curious how to estimate the cost of works, so I can work out whether the numbers make sense. I want to achieve a great end result of > 200sqm, but want to be savvy about where to actually spend the money, especially because I have interior carpentry/fit-out/basic electrical skills and am very "handy". Success looks like a well-crafted finish, but not necessarily expensive materials. I feel confident that the fit-out could be done on a budget, but the exterior and structural work is outside my comfort zone.

 

We've consulted a few architects, who are going by an ex-vat "rule of thumb" of £5000/sqm for extension, and £3000/sqm for interior remodel, excluding any savings from my labour.

These costs seem extraordinarily high to me -- it would mean costs of at least £1M - way more than the finished property would be worth!

 

I'm wondering:

• Are these costs just what the real world looks like in London, 2024?
• How do major costs tend to break down between (1) the building shell, (2) interior "core" reconfiguration and (3) the interior fit-out?
• How much can be saved by handling a lot of the interior fit-out myself (kitchen, laying flooring, carpentry etc.)? I have experience in these areas and have time to hire and project manage specialist trades.

 

If anyone has advice, I'd be very appreciative!

[Mattg4321]

Sq/m pricing is a bit like the length of a piece of string. However, I can quite believe that £5k sq/m would be the going rate for a good quality extension in London. More in an awkward or expensive area - parking/congestion charge etc. 

 

Obviously if using your own labour, then that can be a significant saving, but not so much if you’ll be bringing in a main contractor for the shell. Slightly more saving if you are going to manage trades - groundworkers/bricklayers/roofers/electricians/plasterers etc. 

 

From what you’re saying, if you’re providing own labour for things a competent diyer could complete and managing other trades, then I’d be thinking £3-4K sq/m would be realistic in London. 
 

Whereabouts are you looking at buying as that will have a large effect. 

[Indy]

20 hours ago, sansserif said:

Hi all

 

I'm looking at a few houses in London for potential to redesign and renovate into something special for my family home.

 

The opportunities I'm interested in tend to look like:

• Terraced/end terraced houses of 120-150sqm gia
• Planning potential to expand by another 50-100sqm gia, either via a side or rear extension
• In need of a full remodel - moving interior walls, evening out half-levels etc.
• Sometimes an existing basement that could be finished into a utility/gym space -- or even expanded.
• Opportunity for loft conversion, or a crappy existing loft conversion from 30 years ago.

 

I'm curious how to estimate the cost of works, so I can work out whether the numbers make sense. I want to achieve a great end result of > 200sqm, but want to be savvy about where to actually spend the money, especially because I have interior carpentry/fit-out/basic electrical skills and am very "handy". Success looks like a well-crafted finish, but not necessarily expensive materials. I feel confident that the fit-out could be done on a budget, but the exterior and structural work is outside my comfort zone.

 

We've consulted a few architects, who are going by an ex-vat "rule of thumb" of £5000/sqm for extension, and £3000/sqm for interior remodel, excluding any savings from my labour.

These costs seem extraordinarily high to me -- it would mean costs of at least £1M - way more than the finished property would be worth!

 

I'm wondering:

• Are these costs just what the real world looks like in London, 2024?
• How do major costs tend to break down between (1) the building shell, (2) interior "core" reconfiguration and (3) the interior fit-out?
• How much can be saved by handling a lot of the interior fit-out myself (kitchen, laying flooring, carpentry etc.)? I have experience in these areas and have time to hire and project manage specialist trades.

 

If anyone has advice, I'd be very appreciative!

 

Welcome to the forum and your criteria looks very similar to what I had in mind when we started our search - 4+ years ago. 

 

What you're going to find is finding properties that haven't been maxed out already in London with the potential for space that you're after (in effect trying to double the floorspace) are very few and far between. Most of them have already been extended and the best shot would be a probate sale where an owner has lived in a property for several years but didn't need to extend as the family had left etc etc. 

 

The architect rule of thumb is not too far off - but it really depends on where you are as a lot of places with a proper London postcode will have a London premium also applied to them. £5k/sq may be a bit toppy but the number is definitely between £2.5k - £5k somewhere, based on the extent of work and the level of finish you go for. 

 

If you multiply that by the number of sq m you want to add - you're already somewhere between £250 and £500k. At that level, it becomes easier to just build a 200sq m house from scratch at about £2k/sq m (save the VAT)- which would be newer, more thermally efficient and designed just the way you want it to be. 

 

And the cost to do the work has shot up massively over the last 4-5y, especially since COVID. With the recent market adjustments, I've found that its actually cheaper in most cases to buy properties that area already done up. 

[Alan Ambrose]

I don’t know what area or price range you’re looking in, but I’m finding (based on a small number of data points) crazy money slopping around in the capital, lazy agents and mediocre properties at high prices. There is a real sense that agents can get anything sold in a week. Buyers are often prepared to put down big cash quickly without knowing the most basic information about the property they’re buying. Not that you can’t make your economics work, but you’ll need to be both clever and careful.

[sansserif]

Thank you for the thoughts everyone!

 

On 31/10/2024 at 15:16, Mattg4321 said:

From what you’re saying, if you’re providing own labour for things a competent diyer could complete and managing other trades, then I’d be thinking £3-4K sq/m would be realistic in London. 
 

Whereabouts are you looking at buying as that will have a large effect. 

 

We're looking all over, but generally focused in North London, Zone 2/3/4. So definitely desirable areas, but not Mayfair and normal, residential streets - no weird access issues etc..

 

 

4 hours ago, Indy said:

The architect rule of thumb is not too far off - but it really depends on where you are as a lot of places with a proper London postcode will have a London premium also applied to them. £5k/sq may be a bit toppy but the number is definitely between £2.5k - £5k somewhere, based on the extent of work and the level of finish you go for. 

 

If you multiply that by the number of sq m you want to add - you're already somewhere between £250 and £500k. At that level, it becomes easier to just build a 200sq m house from scratch at about £2k/sq m (save the VAT)- which would be newer, more thermally efficient and designed just the way you want it to be. 

 

Good to know (and sobering) that 5k is not off-the-charts crazy. I'd definitely consider building from scratch, but the problem in London is finding a suitable plot. All the potential infill plots I've scoped out are small, and would probably end up with a height restriction from planning due to density of existing housing. That would limit options to < 100sqm, which is too small. Unless anyone has any secrets for finding larger plots?

 

The range is tricky - 2.5k/sqm is very doable, but 5k is not.

 

 

4 hours ago, Alan Ambrose said:

I don’t know what area or price range you’re looking in, but I’m finding (based on a small number of data points) crazy money slopping around in the capital, lazy agents and mediocre properties at high prices. There is a real sense that agents can get anything sold in a week. Buyers are often prepared to put down big cash quickly without knowing the most basic information about the property they’re buying. Not that you can’t make your economics work, but you’ll need to be both clever and careful.

 

Definitely seeing this on the ground. A lot of unrealistic expectations all round. Seems like economically it's usually a net loss to extend a property in London in terms of value -- even untouched properties -- and it's better to pick up someone else's finished project and let them take the loss... or take advantage of the fact that they did the work 10+ years ago.

I'm trying to be cautious and make sure my plans are approximately costed before diving in, to avoid ending up spending more than the end result is worth!

 

A few more musings:

• Is there a meaningful cost difference per sqm between a multi-storey extension versus a single storey? e.g. a 33sqm footprint over 3 levels, so 100sqm gia. Intuitively I'd say so -- there's only one roof, one set of groundworks, and there should be some efficiencies of scale?
• For a large extension and extensive remodel, how might you expect the final costs to break down in terms of "reconfigured watertight shell" vs "fitting out everything inside that shell"?

[Indy]

11 minutes ago, sansserif said:

Good to know (and sobering) that 5k is not off-the-charts crazy. I'd definitely consider building from scratch, but the problem in London is finding a suitable plot. All the potential infill plots I've scoped out are small, and would probably end up with a height restriction from planning due to density of existing housing. That would limit options to < 100sqm, which is too small. Unless anyone has any secrets for finding larger plots?

  

If I knew the secret - I would have used it myself. We were searching in SW London/Surrey borders so the opposite end of London but demand for large plots that are suitable for redevelopment is fierce as there are lots of people like you (and I) with the same thought process.

 

Where we ended up by accident was buying a bungalow on a large-ish plot that we'll demolish and rebuild. It was a probate sale and the owner had lived here for 50y+ (essentially bought and never moved). 

 

11 minutes ago, sansserif said:

A few more musings:

• Is there a meaningful cost difference per sqm between a multi-storey extension versus a single storey? e.g. a 33sqm footprint over 3 levels, so 100sqm gia. Intuitively I'd say so -- there's only one roof, one set of groundworks, and there should be some efficiencies of scale?
• For a large extension and extensive remodel, how might you expect the final costs to break down in terms of "reconfigured watertight shell" vs "fitting out everything inside that shell"?

 

I'm not sure how scientific this is but a couple of builders have said if its £2k/sq m for the ground level, then factor in additional £1-£1.25k/sq m for an additional floor - IF you don't change the structure too much (i.e. a box above a box). When you get into fancy steel structures and glazing/skylights etc to be added - then those numbers don't apply anymore. 

[SteamyTea]

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[saveasteading]

1 hour ago, sansserif said:

Is there a meaningful cost difference per sqm between a multi-storey extension versus a single storey?

Much the same usually, after deducting the space taken by stairs.

But if the land is expensive that dictates not building on a single storey.

 

I suggest you employ a professional estimating service.  Their costs are also rules of thumb, but by element, so more project specific.

But if you don't know what you want yet, then the $5k /m2 may apply.

Remember that experts are dong this commercially all the time, so you are competing with them.

 

 

 

[sansserif]

On 01/11/2024 at 15:46, Indy said:

Where we ended up by accident was buying a bungalow on a large-ish plot that we'll demolish and rebuild. It was a probate sale and the owner had lived here for 50y+ (essentially bought and never moved). 

Haha even that feels like a dream around here. There are no bungalows that aren't 60sq.m garage conversions. Just terraces of highly variable quality 2-4 storey houses.

 

On 01/11/2024 at 17:21, saveasteading said:

I suggest you employ a professional estimating service.  Their costs are also rules of thumb, but by element, so more project specific.

That's a good idea. I submitted some example plans to an online estimator, which will hopefully give a ballpark that's not a work of complete fantasy.

 

For exterior/shell works, how accurate would you expect an online estimator to be (Estimators.com in my case)?

[torre]

On 31/10/2024 at 14:17, sansserif said:

I feel confident that the fit-out could be done on a budget, but the exterior and structural work is outside my comfort zone.

Perhaps focus on the smaller set of properties where the shell is already big enough then and it's mainly an internal remodel. Play to your strengths, where you can make savings and there are less unknowns like planning, groundworks.

 

You can't out compete developers when it comes to material costs or hiring trades, but can compete on your labour as that's free, so try and max your contribution and minimise the unknowns (sorry this is much easier to say than do)