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?!

Definitely something we need to consider, just that we need to spend a third of the cost (gulp) getting it remotely habitable. (Picture moss growing on walls 😂) The basement is a little harder as we’re actually having issues for insurance purposes, the building insurance is frighteningly high until we underpin.

Anyone looking for a reno project in SW15?

Sorry to hear this JennJenn, sounds like a very sensible decision.

£470k without loft and side return. They are oddly the cheapest bits (other than painting, flooring etc). The basement underpin has to be done unfortunately

www.mumsnet.com/talk/property/4553766-anyone-had-architect-design-completely-unrealistic?reply=117375608

Take a look at this thread, some good suggestions and empathy here. Mainly don’t work with architects!!

Sounds like you would be better off demolishing it and putting in a new build, is that a possibility?

No judgement just agog at the idea of a 2 bedder requiring underpinning, new roof and electrics requiring £700k to do up. Is that more than you're paying for the actual house? London is astonishing.

try to look at the positive. The longer time scale quotes by builders etc gives you longer to save more £££

definitely scale back what you need to do, plus start thinking of what you can do yourselves, and what you can absolutely live without. You don’t need a decorator/tiler/carpets for example.

Anecdotally (several friends who own building contractors) the price increases are much more due to supply and demand of labour than material.

in particular, the London area market relied heavily on European labour.

Combine that with the huge increase in demand in the last year, and builders are basically just putting their prices up to whatever the market will bear. It’s self limiting for them - they hit a price where they have “just enough” work and their prices aren’t quite putting people off.

So 2 main options

1 - wait it out. It won’t last forever. Eventually the labour market will catch up and demand will reduce, and then prices will come back down. Do the bare minimum in the interim, or do nothing and rent.

2 - find another market. London is the most affected. Find a builder from a less affluent area and pay them over the odds for their area to make it worthwhile for their workforce to travel to you.

Sounds like the issue is as much the basement underpin which you just didnt know about until after you’d bought, as the rising costs then. So werent factoring into your budget at all. Even if the other costs remained low, that would have brought you over budget..
did it come up in the survey?
i would not sell now you’ve bought. its a false economy. Stamp duty + rent in the meantime + prices remain high.
its stressful to have to stretch yourself to the limits and not manage the dream, but it can all come in time.

Your architect didn’t give you a quote, they gave you a ball park figure based on a similar live project - what else did you expect them to do? How is the price increase their fault? It’s not the builders fault either, the fact is that build costs have absolutely rocketed over the past six months, suppliers are holding prices for seven days currently because of constantly moving material costs. A shortage of subcontractors/ excess of build projects has seen their daily rates rise very high too.

You will need to dramatically cut back your proposals to essential works to make the house liveable and hopefully some sanity will come back to the pricing in the very near future to enable you to see through your plans.

Already got family friends lined up for carpets, tiling etc and definitely need the year for saving - that is definitely a positive!

I’m aware, that’s why I said we got ball park figures before we bought - we only got quotes in the last 3 days. It’s impossible to get a quote without the detailed quote. No one knew what was going to happen - certainly no one is at fault. There’ll be plenty more in the same boat as us. Like you say just scale back (or sell)

When we originally went to see the architect we mentioned it to them, the original number excluded the basement work (the £350k). When they came out with the builder they were working with a few streets away (still before we’d bought) they revised their ballpark upwards of £60k. That £60k is now £112k. The structural survey picked it up - we knew before buying, it’s just the cost we didn’t know fully as we’ve waited almost 4 months for planning permission which was preventing us going out to tender

This is hugely help @iwishiwasafish - we do have an option where we could ‘wait it out’ until next year and go in to rented. I was under the impression these costs will remain high for longer than the next year. But good to know that might not be the case so thanks for this idea

One of the builders is an out of London builder (still Home Counties) - tried to get one from Hampshire and Berkshire but neither wanted the work 🙁

Wow those costs are high!!

I assume it's a very expensive house though?

Static caravan in the garden for a while?

I am guessing neither you or your partner are in the building trade.

If your not in the building trade, put it on market, sounds like a nightmare and the costs won’t stop at your quotes.
did you buy it knowing it needed underpinned?

I am partway through from what sounds like a very similar project minus the basement. My total costs will be around 200K which I was horrified about. Your estimates seem obscene! I feel like the main contractors are taking the a bit in the current climate. Agree with PPs that the market will not tolerate this 'ambitious' pricing once the recent demand has died down a little. Region by region it seems the the ballpark cost of this type of project equates to roughly the value increase of the property. Otherwise people just aren't going to fork out. So you might find that you are in a better position in the future if you can get the bare minimum done now?

Have you considered project managing rather than going with a main contractor? I ditched my builder and am now getting trades in as I can afford them. It is not ideal by any means as I am also losing time and paying rent but I couldn't stomach the 20% (at least) that the contractor creamed off from every contract. Also with all the subcontracts I found that a lot of them did the bare minimum as they were not the most lucrative contracts for them and I had little control to try and put things right.

I have also ordered my own windows, plaster, flooring etc. and made some big savings over main contractor estimates.

I’m amazed at how many people on this thread haven’t read the OP.

It’s not habitable! They are underpinning the basement! This stuff isn’t optional.

OP, I have no advice, but I am renovating at the moment so feel your pain. I agree with pp who said you won’t necessarily be in a better position if you sell, though.

Good luck with yours and I hope you’re surviving. It’s really not for the faint hearted in this climate - we budgeted 25% more and have massively reigned in our spending over the last 8 months but the costs do snowball at a speed at the moment that just seem unimaginable. Also - I have two quotes that are valid for 7 DAYS!

I hear you OP. I'm about a year ahead of you and have seen prices blown out of proportion in just that time. We bought an un-livable, derelict property which had been empty 7yrs. Originally built about 1920's, but not touched or updated for 40yrs+.

I'm glad you found out about the 5% VAT to get it back to a livable state. Most trades are aware of the new build scheme- but very few are aware of the derelict home scheme. Even after seeing our council certificate, many companies and trades have said they won't accept it, WE need to claim the VAT (not true!) or ignore it! We have, however, found a few companies (a building suppliers merchant, electrics and plumbing company) who accept it. With most trades, we have therefore bought the materials and just pay a day rate for trades.

Do you NEED an architect? If you know the layout and plans you want, just get a draughtsman to draw them up. For a qualified architect, we were quoted between 10-20% of the overall build. I might be naive of the costing, but I don't understand why they should get paid more- if I chose a gold plated bathroom set or a swarovski door handle? Surely- they should be paid to draw up the plans- not dictate a price based on what overall cost it is?

We have been living in a tiny static van in the garden. Would this be an option? or living in a garage? We have some boxes and stored items in the house, but despite rooms being sealed off etc, the dust and debris is awful. I would NEVER try living in a house undergoing the amount of renovations our houses need. Where are you living now?

We aren't in central london now, so different I know, but we have tried to use local trades, recommended by other good ones. Our roofer recommended a builder, who in turn recommended a renderer etc. We did get other quotes for everything though. We have been very fortunate, but equally, we are aware that this house is like a piece of string. Things will be uncovered that no survey would have found. Once walls are removed- hidden problems can be visible and in our case- they have.

We took out walls to open up the kitchen diner. We were given a quote for steels- which they could only guarantee for 7days- otherwise the price went up again. Most other quotes were for at least 28days, so we are living in crazy times.

DH and I both work full time- but have no children. DH in particular has had to learn a massive amount about various renovation tasks and we are essentially project managing it. Will you be managing it yourselves, or paying someone else?

Ours if a 4 bed, 2 storey in Sth East. Everything had to be stripped back, re wired, new plumbing, insulation, new roof and tiles, all new double glazed windows (over 40 of them!), 3x4m extension, 3 chimneys removed, walls removed and 3 massive steels put in, dug up existing concrete floors and lay again (building control said it wasn't thick enough!), 100 tonne of rubble removed from garden and house, underfloor heating put in then a screed on top. Lots more has been done but so far, we are at £200,000. 1st fix is pretty much complete. This doesn't include the cost of the kitchen, 3 bathrooms, flooring, appliances or decor. Let alone actual furniture! We expected to spend about £100,000 when we started. We did expect to find extras to be done, because you just can't predict exactly with a derelict property. We didn't, however, predict the affect of brexit/covid etc when we started. We plan to live here for many years to come though and to have a massive garden, friendly street in a lovely area has been worth it so far.

Sorry this is such an essay! If you have any questions please ask.

Wow those costs are eye watering.

I'd try and get further quotes although appreciate even that isn't easy.

Or break it down into smaller projects you can manage. The initial work is going to need a proper main contractor but maybe just take it to first or second fix with them?

Then book your trades separately.

You need to learn as much as you can about the process. The side return is probably easier done now. You could cut costs on interior joinery, mothball certain rooms, run the plumbing and electrics to the loft but leave it for a while

Would it cost £650k to demolish what's there, and build a completely new house OP?

If you've not had a quote to take that approach, I might try that first, and perhaps it would cost you £400k or similar instead (here's hoping!).

@MarmiteCoriander we sound like we’ve bought very similar houses! Ours was built in 1908 and we are the third owners in 115 years! The last owner lived in it from the 50s and has did nothing to it, it obviously fell in to disrepair when he live there and then it was locked up 5+ years ago and it’s awful inside. I might message you for tips!

My husband and I both work full time (he’s away a lot with work (at least 3 nights a week but more like 4) and I work long hours in the city 3-4 days a week hence why we haven’t considered project managing it ourselves but now everything is on the table. I love the idea of living in a caravan in the garden - if you have any suggestions as to how we can get one in our terraced house garden please let me know (crane?!)

you’ve made amazing progress for £200k - have you did work yourself or is this still been via tradesmen but you’ve just been sourcing yourself?

Good luck with yours and sounds like you’ve got it all under control - definitely taking away some of these ideas and might drop you a message if you don’t mind answering some more questions

RE: architect, the design they came up with we’d never have thought of (moving staircase and flipping it the opposite way to give us back about 300 sq ft of what was going to be unuseable space), drawings are all done and we have planning. We have paid them for all of their services to date and the plan was they would continue project managing it but we’ll stop that now. They fixed their fee for us so we didn’t pay 10-20% of the project value but they were about 5% of the initial quote.