Navigating Home Transformation Costs in London: A Comprehensive Guide
Embarking on a journey to transform your London property is an exciting endeavour, and understanding the costs involved is a crucial first step. As architects with years of experience in crafting bespoke homes in and around London, we are here to shed light on the intricacies of budgeting for your project and help you assess how much it costs to transform a house in London.
As residential architects in London, our commitment is to go beyond the conventional and design homes that are joyful, colourful, and designed for living. This article is tailored for individuals seeking a distinctive touch for their homes—something bespoke and unique. Consequently, the cost advice provided is based on comprehensive transformations.
Breaking Down the Total Budget for your Home Transformation or Extension:
Creating a realistic budget involves considering various elements to ensure your vision aligns seamlessly with financial expectations. Here’s a breakdown of what typically comprises the total budget:
- Construction Costs
The construction cost refers to the payment made to the builder for completing the works. Defining everything encompassed by construction cost is analogous to envisioning turning a house upside down and shaking it; anything that firmly remains in place is regarded as part of the cost. This incorporates fixtures, fittings, and finishes—examples being kitchen units, floor finishes, and light fittings. To understand a little bit more about how construction costs are broken down (by cost consultants and by builders alike), there is a section at the end of this article.
- Professional Fees + Permissions
The fees cover the costs associated with essential professionals, including the architect, measured surveyor, cost consultant, building control surveyor, and structural engineer. Items such as opening works (such as trial pits) or investigation costs should also be factored in here.
The costs for permissions, including planning applications and agreements with the water authority, are usually relatively small compared to other project expenses when undertaking a comprehensive renovation.
- Contingencies
Contingencies in a building project refer to budgetary allocations set aside for unforeseen events or changes. This includes design contingencies for potential alterations to the initial plans, construction contingencies for unexpected on-site challenges, and inflation contingencies to account for price fluctuations in materials and labour during the project timeline. These buffers ensure financial flexibility and help mitigate risks throughout the building process.
- VAT
VAT, or Value Added Tax, in a building renovation project, is a consumption tax applied to the purchase of goods and services. It is typically included in the cost of materials, labour, and other project-related expenses, contributing to the overall project expenditure, with the caveat that certain exemptions or reductions may apply.
Estimating The Construction Cost for your London Property
Utilising a per square metre cost rate is an appropriate initial step when estimating the budget for a construction project, especially in the early stages of design ideas, before detailed designs take shape. This method provides a broad but essential understanding of the potential costs based on the size of the project area. The per square meter rate serves as a preliminary benchmark, offering a quick and convenient way to gauge the financial scope of the project. It aids in setting realistic expectations and aligning the initial project vision with budgetary constraints.
For homes located in central London involving a total house transformation, including extension and refurbishment, a good approximate per square meter cost to allow for is between £2800-3200/m2 (Nov 2023). This amount is based on taking a holistic ‘whole house’ view that allows for more expensive areas of construction (kitchens and structural extensions for example) alongside lower cost areas of refurbishment (existing bedrooms for example).
While this method may not account for the intricacies of design nuances, material choices, or specific site complexities, it offers a foundational framework for homeowners to commence the budgeting process and engage in more informed discussions with us on next steps. When we are working on bespoke homes in central London, after initial designs are completed, a key part of our design process is to have the proposals costed in a more comprehensive way by a cost consultant. We see a real benefit in having a ‘neutral’ party to the architect client relationship provide a detailed analysis of costs. As the project progresses, this initial estimation, based on experience and assumptions due to the preliminary nature of the designs, can be refined and tailored to align more closely with the evolving design details and decisions made on designs, materials and products.
Estimating Total Project Cost for your home renovation
Once the estimated construction cost is determined, using the per square metre rates, you can then proceed to estimate the total project cost by applying percentage overlays to cover various aspects. Typically, we recommend allowing approximately 50% of your estimated construction cost as an overlay, to allow for the following.
- Professional Fees and Permissions
Approximately 15-25% (of estimated construction cost)
Note, the above is for all professionals typically required and assumes a comprehensive service, including administration of the contract during construction.
- Contingencies
Approximately 10% (of estimated construction cost) (note, we recommend slightly higher if your property is a Listed building).
- VAT
Typically 20% (on total amount) (note, you may be eligible for reduced rates of 5% if it qualifies for the HMRC’s reduced rate scheme. The reduced rate aims to encourage the revitalisation of vacant properties and promote sustainable development).
These overlays ensure a more comprehensive budget, accounting for essential professionals, permissions, unforeseen events, or changes (contingencies), and VAT on goods and services. This detailed budgeting approach provides financial flexibility, allowing for informed discussions and adjustments as your project progresses and evolves.
A worked example
- A property of 120m2 being completely refurbished and extended to increase by approximately 20m2 (120+10 = 130m2 total)
- 130m2 x £3000/m2 = £390k Construction Cost
- £420k + 50% = £585k Total Project Cost
What if I’m not planning on doing any structural work?
The average cost per square meter method, as discussed in the preceding paragraphs, serves as an excellent introductory approach to estimating the cost of planned work on your property. However, it is an average that presupposes entire house transformations, encompassing a combination of extensive structural endeavours (such as concrete foundations and steel beams) and interior fit-out and decoration (such as timber stud walls and painting). This assumption may not be universally applicable to all projects, as some may involve minimal comprehensive work or none at all.
A more nuanced method for assessing costs for your home involves distinguishing between these two types of work and applying them to your specific project. Presently, we are observing costs ranging from £3,500 to £4,200 per square meter for comprehensive works that entail structural modifications and £1,500 to £1,900 for fit-out works within existing spaces that do not require structural alterations.
To illustrate, consider the previously provided example of a 120m2 property undergoing refurbishment. Suppose it is not undergoing an extension, and the refurbishment works are of a simpler nature.
A worked example for refurbishment only
- An existing property of 120m2 total
- 120m2 x £1650m2 = £198k Construction Cost
- £198k + 50% = £297k Total project cost
The differentiation between these two scenarios showcases the versatility of budgeting methods, emphasising the importance of tailoring the approach to the specific nature of the planned work, whether it involves extensive structural modifications or more straightforward fit-out works within existing spaces. This nuanced assessment enables informed discussions and adjustments as the project progresses.
How do Bradley Van Der Straeten Manage Costs During a Project?
At Bradley Van Der Straeten, we prioritise transparency in managing costs for home transformations, ensuring that our clients are equipped with the necessary information right from the project’s inception. Our commitment to informed decision-making begins with the very first meeting. During this initial consultation, we engage in discussions about design preferences, test preliminary sketches, and present an overview of potential associated costs. This process, akin to the methods outlined in this guide, is tailored to the unique specifications of your project.
These early conversations serve as the foundation for shaping the design direction as we transition into the subsequent concept design stage. As we progress through this phase, we recommend our clients to appoint a cost consultant to produce an initial cost report based on the favoured design. This report becomes a valuable tool, not only for instilling confidence in what to submit for planning application submissions but also as a guiding framework throughout the technical stages of design development.
The cost report serves as a dynamic reference point, enabling key decisions in the design process to be aligned with an overall cost target. By integrating cost considerations into every stage of the project, we empower our clients to have a clear understanding of the financial landscape, fostering collaboration and ensuring that the envisioned transformation aligns seamlessly with budgetary expectations.
What Are Construction Costs Composed Of?
Over the years we have seen a lot of construction cost documents produced by builders quoting for projects or produced by cost consultants as cost reports or estimates. They all can differ slightly in the way they are compiled but broadly follow a similar structure. To our clients, they can often appear slightly overwhelming. They are composed of a mixture of very tangible items, such as taps, light fittings or floor finishes and other less tangible items such as preliminaries (every client asks us what these are!) so below is a breakdown of the typical sections seen in a construction cost and an explanation of each one;
Shell works
The shell works of a domestic project refer to the primary structural and exterior components of the building, including foundations, walls, roof, windows and doors. These elements provide the basic framework and envelope of the building and are typically installed before the interior finishes are applied.
This section is probably the most difficult for a lay person to be able to estimate component by component as this section is most influenced by raw material costs and labour costs that cost consultants and contractors have access to and experience of calculating. This section is usually broken down into the following;
- Demolition
- Substructure
- Frame
- Upper floors
- Staircases
- Roof
- External walls
- Windows and external doors
- Shell services / mains services
Fit Out works
The fit out works of a domestic construction project refer to the interior finishes and installations that are added to the building shell after its completion. This includes all of the non-structural elements, such as flooring, wall finishes, paint, cabinetry, lighting, plumbing and electrical work.
On all the above items, your cost consultant or builder will calculate how many square metres or what quantity are required and what install labour costs to allow for. This section is usually broken down into the following;
- Internal walls
- Internal doors
- Wall finishes
- Floor finishes
- Ceiling finishes
- Fixtures/fittings
- Mechanical services
- Electrical services
- External works
Preliminaries
Preliminaries (also known as enabling works) are critical to the success of any construction project as they lay the foundation for the main construction work to take place. They ensure that the site is safe, accessible, and ready for the main construction work to begin. They include site clearance, demolition, removal (including skips), installation of temporary services (including toilets) and fencing and security around the site.
As a rule of thumb, preliminaries will usually account for between 10-15% of the total construction cost. This section is usually broken down into the following;
- Site clearance
- Temporary services
- Site preparation
Note, our advice and cost estimations are based on our extensive experience as architects specialising in bespoke homes in London. However, it’s important to note that each property and project is unique. Variables such as specific site complexities, material choices, and design nuances can significantly impact costs. Therefore, while our comprehensive guide serves as a valuable starting point, we recommend consulting with our experienced team to tailor the budgeting process to your specific project requirements and ensure accurate estimations.
Are you planning to transform your home? Contact us by clicking the link below for tailored advice relating to your specific project and for guidance on next steps.
- Some other links you might find useful
For advice on VAT for construction to your home
https://www.gov.uk/vat-builders
For advice on working with architects, visit the Royal institute of British Architects
https://www.architecture.com/working-with-an-architect
