Renovation - costs spiralling out of control

[planforeverything]

Not really sure what I’m looking for here - maybe to see if anyone has been in the same boat or thoughts on what you’d do?

We bought a house in January that was not habitable and requires complete renovation (it hasn’t been touched since the 50s, no central heating, rewiring, everything out and everything new back in plus a side return and loft extension).

When we were due to make an offer on the house we tried to get builders to come out to give us ‘ball park’ numbers and had no success. We went to a local architect who gave us a rough quote based on a similar house they were doing 3 streets away from us, similar condition etc. They were also able to get the builder from that project to come out who gave a slightly higher estimate £20k but not a huge variance from what they said given the overall project value.

We made an offer on the basis of this quote and it was accepted. We got keys end of January, applied for planning end of February and got planning permission 3 weeks ago. About 8 weeks ago the same builder who came to the house (who we’d hoped to use) called us and said materials costs had risen hugely since January and he wanted to make us aware. With his restated number we said we wouldn’t be able to work with him and said we’d go out on a formal tender when we get planning permission. So we did…

On Thursday, Friday and today I’ve had 3 quotes from 3 separate builders and the lowest one is a 80% increase from the quote in January. The other two are 100% - completely doubled. Two of them are higher than the quote we had from the original builder who came out to see the house and who’s now booked. We are gobsmacked, shocked, devastated - the list goes on. I’ve been harpering on to our architect for the past month that I was terrified the costs were going to be crazy different - she didn’t really say much other than don’t worry.

We’re now in a position where we have no idea what to do. 1) Sell our house (our flat is due to exchange in the next 1-2 weeks) and take the £20k hit we’ve spent on surveys, structural engineering fees and architect fees and either move out or London (we both work here) despite neither of us wanting to and we need more space or stay in our flat (even though we got offered crazy money for it) 2) Go ahead with the renovation and spend £100k (possibly more) than the house will be worth and be here for 5-10 years. I cannot say whether this is our ‘forever home’ as I don’t view life in that way - things change, circumstances change - but my husband would happily stay in it until retirement.

This also assumes we can borrow the additional money we’ll need and afford the mortgage payment given interest rates have gone up since we met with our broker in January. FWP but my god this isn’t for the faint hearted. I can’t stomach we’ve bought the most amazing house in the perfect location and we might have to let it go - we are both so wedded to it emotionally.

Has anyone else been at the hands of the increase in costs in the last 6 months - if so what the hell did you do / are doing?!

I was confused on first reading your post.... But when you say "a slightly higher estimate £20k" you mean the second estimate was £20k higher?

Because when you describe the work it sounds like £150k+, I know loft extensions alone are often £40k-£60k....

Were the numbers the builder and architect gave you at the beginning based on drawings, plans, structural engineers calcs etc.? If not, then it was always going to be higher.

We are spending double what our architect was working on.

Can you not do the extension, and focus on making it liveable and therefore remortgageable later on. So focus on plumbing, heating, electrics and finding everywhere a lick of paint.

I feel for you. Not what you want once you've purchased the house. Can you live in it as it is?

Buy it and live in it if you love it - if you don't love it, sell it on but don't forget, people are more wary about builders' costs now

We have had exactly the same experience with this house. We haven't started yet but we're meeting the architect next week. We have the official quotes. We've decided to change our plans and stay here for longer because like you, we will never be able to make this back short term.

Do you have to do all the work in one go?
full internal reno + side return + loft… could you not do the first of the three to make it liveable and leave the rest for a few years time?

Building costs have escalated unfortuantly and backing out now and trying to buy somewhere else probably won't help. Personally I'd stick with the house purchase either slow down your renovation plans or take the hit and do all at once bearing in mind pre covid building costs went up 10% year on year and prices never go down.

What's your alternative plan vs continuing and is it sustainable?

Can you not scale back your renovations - don’t do the loft and side return extension. Just renovate the main house. If things change later and you decide to stay, that when you extend.

Do you have to do everything all at once? I know its a pain to renovate once you are in situ but can you do existing works now (electrics, heating etc) plus future proof a bit for a more work (eg electrics in loft etc) and then do loft and side return at a later date? At least then you get the house in the location you want, even if the internal layout isn't exactly what you want.

We are SW London - slightly different situation, but we bought our house 4 years ago and we couldnt afford to do the work we wanted. We had it rewired, partly replastered, bits and bobs to make it liveable and safe (including a new front door and porch which was ridiculously more expensive than expected). Renovated the garden so we had somewhere nice to sit in the summer. We are now doing the loft and will prob do rear extension in a couple of years. Yes its been a bit painful - especially in lockdown with two of us working from home and then a newborn last year - but it's meant we havent had to massively stretch ourselves on the mortgage and we've made do.

Take a long hard look at what bits you can do yourselves: painting, plumping, tiling are all things I'd tackle myself (I love tiling!), and save money there.

Is it in any way habitable? Can you bodge it for a while. We've been in our house years, and never managed to save the money for a full renovation. Luckily it's habitable, and we have learnt to lower our expectations. We aim to do little bits each year as and when we can afford it.

Otherwise pop it back on market with architects drawings and take the hit.

I hope no one is offended by the numbers (I am!) but the architects initial ‘ball park’ was based on the build costs of another house which was, on a floorplan basis, almost identical and similar condition. They quoted us £350k, the builder they were using for that house they quoted us from came in at £370k - this was all just to give us an idea of whether to buy it or not. (We had a quote of £280k the year before again of an almost identical house). Since the £350k quote we added in (based on architects floor plans and structural drawings) some work in the basement which they estimated at £60k - so let’s say £430k

The quotes we’ve had 3 days ago are £630k £690k and £700k. I am bewildered.

Unfortunately building supplies have rocketed and tradesman are in short supply so their wages have massively too.

Renovate the house don't do the side return and live in it.

I wish - It’s not remotely habitable, it’s not been lived in for 5-6 years and was in disrepair prior to this and is a wreck. Every inch of it is covered in black mould and being in there for more than 30mins has you coughing.

Another house on the street has just come up for sale that needs extending (and is an old persons home) but is totally habitable but is £200k more than what we paid so I suppose the price we paid is reflective of the work that needs done.

So glad you can live in yours - makes such a difference

We definitely would do all that but unfortunately it’s all the structural work, new roof, underpinning the basement, new windows, electrics, heating system that is making up the bulk of the budget.

Will you be able to not pay VAT as it's been left empty? That must be a huge chunk.

Not quite your numbers but quotes of between 150-200 2 years ago when we started our journey are in reality closer to 350 now we are doing the work. Fuel, labour, materials.....all gone up.

Yeah, we got planning for a small extension in February and the builders quotes came back double. We are not going ahead for now as the numbers just do not stack up at all anymore. The extension isn't essential for us though, we can make do perfectly fine.

So if you take away the side return, loft and basement what would the cost be then? Surely 350-400 which is more like your original budget?

I think it’s obvious you need to scale back your plans. Either a side return or a loft extension- whichever one is cheaper

1. Never go with an architect's estimate, they always wildly under budget in my experience
2. For any major self build or renovation always add 25% minimum in cost and timescale contingency
3. Post Brexit and covid expect to pay a further min 25% more for materials and labour, and have a much lengthier wait for trades

This doesn't help when you're so entrenched in the process so I would look to borrow more and scale back on the renovations where you can. Do whatever non skilled labour you can manage yourselves. The housing market is bonkers just now unfortunately.

the basement would be VERY expensive. ditch that first.

what is the absolute minimum you can do to make it habitable? new roof, central heating, electrics? plus IKEA kitchen & bathroom. If you can do that and then move in and live there for a couple of years, you can save to do the rest later.

Can't compare your exact situation but I have a couple of friends having attic conversions done now and prices have indeed doubled due to material and import costs.
That really sucks, I'm sorry you're in this situation

Sell it. What you wanted isn't feasible for you.
You could probably get enough to cover your costs.

All of the quotes exclude VAT. Thank God we qualify for 5% VAT!

The basement is an old air raid shelter built during the war, dug out by hand. Turns out they’ve dug beyond the foundations so the basement work is to underpin the existing foundations of the house. It’s a non-negotiable.

About a third of the cost is the roof, basement underpinning, windows, electrics, heating etc. 25% is the extension (loft and side return) so >50% isn’t any finishes (plastering, ceiling finishes, bathrooms, plumbing etc).

If we keep it I think we’ll do as what people have done on here - get it habitable and don’t extend and do it at a later date to take it from a 2 bed to a 4 bed

Oh god, OP that’s so terrifying.

When we did a renovation the costs were double what we were originally quoted, so I do understand somewhat.

As I see it you have two options.

1- Sell as you suggest and stomach the manageable (but still horrible) losses.

2- Do an “interim renovation”. Cut down all the work. Ditch the architect, keep the existing floor plan and work with what you have. Make it safe, not perfect. And sit on it for a year or two to save cost.

Im sure the structural work needs doing, but equally if the property is still standing you probably have at least a few years before it’s dangerous.

might that work?

Thank you SO much.

1. I wish I’d read this in December. I feel annoyed at them - they haven’t batted an eyelid at the fact the quote is higher - it hasn’t even been acknowledged. They just said ‘are you happy for us to review and make a recommendation on who we think best to go with?’ I understand this is totally out of their control but it’s just assumed by them we can carry on without a consideration for the price
2. That’s the other but - timescales. Architect - ‘6 months.’ Every builder who quoted ‘9-12 months’

My worry is ending up with wildly overspending what the property is worth but I suppose the market isn’t predictable (and SW London is crazy prices) and we won’t be the first.