How to calculate the rebuild cost of your home

The rebuild cost of a house is the estimated price to completely rebuild a property from scratch.

While this may seem unnecessary to know, unfortunately, it can be important if, for example, your home is destroyed by a fire, flood, or some other disaster.

Your buildings insurance provider needs to know the estimated house rebuild cost so they can offer you an accurate policy for the right price. Then, if your home is destroyed, you will be covered, and you can rebuild your home.

We will look at rebuild costs, what they are, what they are based on, and how they are calculated.

How do I calculate the rebuild cost of my home?

You can calculate your home’s rebuild cost by either commissioning a surveyor to conduct a report or using an online rebuild cost calculator. If you or the previous homeowner have previously done this, you can find the rebuild cost of your home:

in the deeds to the propertyin your mortgage valuation reportin your buildings insurance documents.

The total rebuild cost of your home is based on several factors, including the following:

the cost of the labour requiredthe cost of the materials usedthe property type and stylethe size of the propertythe age of the property.

So let’s jump in and find out the difference between the rebuild cost and the market value of a property.

Is the rebuild cost different to the market value?

The rebuild cost of your home differs from the property’s market value.

The market value refers to how much your home would cost to buy and takes into account factors such as the land, location, school catchment areas, local crime statistics, surrounding amenities, etc.

While the rebuild cost considers the cost of rebuilding your home from scratch if it was destroyed, it factors in the cost of materials, professional fees, labour, site clearing, etc.

Therefore, the rebuild cost of a property is almost always going to be lower than the market value as the market value includes the building costs as well as other factors that add value to the property.

The only time the market value may be less than the rebuild cost is if the land the property is built on is worth more than the property, which may happen if an area becomes derelict and is abandoned.

Why do I need to know how much it would cost to rebuild my home?

You need to know the rebuild cost of your home so you can get buildings insurance quotes and policies from insurance providers. They can then use that estimation to work out how much you should pay to insure the structure of your home.

Although buying buildings insurance is not a legal requirement, most mortgage providers won’t offer you a mortgage unless you have it. In the unlikely event of your home being completely destroyed, your mortgage provider needs to know that their investment in your property is safe and financially protected, which is what buildings insurance offers.

What happens if I underestimate or overestimate the rebuild value of my home?

Underestimating or overestimating the rebuild value of your home can result in extra costs for repairs or insurance payments.

If you overestimate your home’s rebuild value, you will pay more for your buildings insurance premium. Your provider will offer you quotes and policies based on your estimates. So, if you overestimate, your insurance costs will be higher.

If you underestimate the rebuild value of your home, you run the risk of not having enough insurance coverage if you need to pay for a rebuild. Although your premiums would be lower, you would have to pay for any costs that weren’t covered by your provider, which could be tens or even hundreds of thousands, so underinsuring your home could be very costly.

What other factors might affect the rebuild cost of my home?

Other factors that can affect the rebuild cost of your home might include any specialist materials used to build it, such as a thatched roof or insulated brick walls. This is particularly relevant if your home is a non-standard construction, which includes properties made from timber or pre-fabricated concrete houses.

Also, if you live in a flat or an apartment, there may be extra costs depending on the position of your property. A flat in the middle of a block will be more complex to rebuild than one at the bottom.

How to calculate the rebuild cost of a property

The easiest way to calculate the rebuild cost of a property is to use a rebuild calculator These tools are usually free and consider the property size, age, location, features, market value, etc., to estimate the rebuild cost of a property. However, they are not entirely accurate, so the estimation may be slightly off.

You can also pay for a surveyor to conduct the estimation in person. They will visit your home and thoroughly inspect your property to arrive at a rebuild cost. This costs money but is generally far more accurate than an online calculator. However, be sure to choose a certified chartered surveyor (by RICS or similar) to get an accurate estimate for a licensed professional.

You should also be able to find the rebuild cost of your home in the deeds to the property, your mortgage valuation report, or your buildings insurance documents. However, check when the last estimate was made, as there may have been changes made to the property since then, and the costs of materials and labour will have changed too.

How do I measure my house in square metres?

Knowing how big your house is in square metres is a key factor in getting an accurate estimate for the rebuild cost. So let’s look at a step-by-step guide on how to measure your floor area to accurately measure the size of your house:

Find a tape measure that measures in metres and centimetres.Measure the length and width of a room.Multiply the two numbers together to get the total area of that room.If the room is an odd shape, then break the room down into individual rectangles, calculate the area of each one (by multiplying the length by the width, and then add all the rectangle areas together.Repeat these steps for each room and corridor in your house.Once you have done every room, add all the area values together to get the total size of your home in square metres.

What if I make changes to my home?

If you make significant changes to your home, you should have your rebuild cost re-estimated and inform your insurer of the change in value.

For example, if you build an extension on your home, a new garage, or get a loft conversion, your rebuild costs will go up, and you will need a new valuation. Similarly, if you tear down an outhouse to make space for a bigger garden, your rebuild costs will go down, and you will need a new valuation so that you are not overpaying for your insurance.

FAQs

Where can I find previous rebuilding cost estimations?

You can usually find previous rebuilding cost estimations in your:

mortgage valuation reportthe deeds to the propertybuildings insurance documents

Should I get a professional rebuilding cost assessment?

A professional rebuilding cost assessment conducted by a chartered surveyor will normally cost hundreds of pounds. However, it could be more, depending on the surveyor and the size of your property.

The question of whether you should pay for an assessment or use an online calculator is a financial one. But there are also financial considerations with regard to using an online calculator and getting an imprecise estimation. As we have seen, the financial repercussions can be disastrous if you underestimate or overestimate the rebuild cost.

So you should pay for a professional assessment if you can afford it, as it should be more accurate. If not, use several online calculators and make sure they all suggest similar estimates.

Do listed buildings cost more to rebuild?

Listed buildings typically cost more to rebuild than regular buildings. This is because they often require specialist materials and tradespeople for their reconstruction.

If you live in a listed building, you should get a professional rebuild cost estimation from a chartered surveyor, as there will likely be costs that a generic online calculator won’t pick up.

Depending on the type of listed building you live in, your local council may also be involved in estimating the rebuild cost. In the event of a rebuild, they may even contribute to the rebuilding process.

Do I need buildings insurance?

Buildings insurance is a component of home insurance. It is not required by law, but most mortgage brokers won’t offer you a mortgage unless you have buildings insurance.

If you don’t have a mortgage and no broker is demanding you get it, it’s still wise to buy buildings insurance, as it protects the structure of your home against damage caused by fire, floods, storms, vandalism, and (sometimes) subsidence, all of which are out of your control.

How much does buildings insurance cost?

Building insurance costs are based on several factors, including the rebuild cost. There is no fixed rate for buildings insurance as so many variables are involved. However, the average cost of buildings insurance in the UK is £111 per year – a small price to pay to protect your property.

Summary

To calculate your home rebuild cost, you can either pay for a chartered surveyor to conduct an in-person inspection and provide you with an estimate or use an online rebuild cost calculator. You should be able to find the last estimate on the deed to the property, though it may need updating.

Knowing an accurate estimate of the rebuild cost of your home is important for making sure that you pay the right amount for your insurance. If you underestimate the rebuild cost, you might have to pay thousands of pounds if you ever need to rebuild. You will pay too much for your insurance if you overestimate the rebuild cost. So ensure your rebuild costs are up to date to guarantee your home and your finances are kept safe.

Also read:
Landlords: could your properties be underinsured?
Is the landlord or tenant responsible for buildings insurance?
Is it a legal requirement to have Home & Contents insurance?