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?!

We’re a terraced house in a conservation area (and it is stunning externally) so not an option for us.

Don't do it. Renovation costs are going up by the day.

We live in ours and do it very slowly but we had a full rewire in 2018 that was £4k that would be £6k now. We've had a 12m square extension that should have cost £65k and its cost £105k. It feels like it'll never be finished now. We budgeted £200k when we bought the house (much less work than yours) but we've already spent nearly that and we're less than halfway done.

@Badnewsoracle sounds like you’ve had a tough time, so sorry to hear this. Hope you get it all finished at some point.

Unless there are huge holes in the roof then you might be able to patch repair small leaks for a few hundred pounds and get the re roof done later. Reroofing doesn't affect internal stuff much so would be a good thing to save for later if you need.

I think I'd do the 'required' stuff so I could live in it and hold on the rest in the hope things will settle down a bit. We bought a doer-upper just before lockdown. 🙄However, we did our own estimates of work that needed doing, and doubled it (we've both had to do quotations for work, though not building work). With some jobs that's been about right, others came in cheaper, we found some problems we and the surveyor couldn't have seen, so we're about square, even with the increaed costs in labour and materials due to covid/brexit. But in the NW we're a lot less affected by the loss of EU workers -there never were as many. Materials costs realy have gone up- our electricians came back to rewire the kitchen, which we couldn't do before we moved in, and told us how much their basic wire had gone up since per roll- it was eye-watering. But cable always does go up and down a lot, because copper does.Timber, at least hereabouts, went up a lot but doesn't seem to be going up even further, so things do seem to be stabilising.
There is an advantage to living in a place a bit before deciding exactly what you want. Covid and an unforseen problem with the plaster (turns out there wasn't any, only chipboard under tiles) delayed our kitchen. I ended up designing it quite diffrently ( and much better) bcaue we'd tried out a few layouts while we 'waited' for things. There can be upsides to delays.

We renovated a 3bed semi in SE London last year, small extension to back, 2 doubles and a bathroom in loft, full refurb, electrics, heating, windows, internal walls down, etc. Appreciate we prob got our quote late 2020 so very very fortunate time wise. We spent about 200k. Lots of the cost was client supply items kitchen, tiles, flooring, etc. Someone came to our door saying our builder came in cheaper than their other quotes would we recommend. They did take longer and cost more, we had some issues during the build but that is par for the course and ultimately the quality is good. I will try to pm you company as might be worth getting them to quote.

I’d be seriously rethinking. We’ve done up two houses and two flats since 2001, took a look at a few new projects recently and decided against it. The market - Labour and materials - is too volatile unless you are seriously wealthy / willing to throw huge sums of money at it

You’ve had some great advice here, I agree with most of it. I would definitely do the basement, patch the roof if possible and then make the house habitable (if you can patch the roof then you could possibly live upstairs with a temporary kitchen). If your partner is away then allow yourself to stay in a hotel a couple of times a week if necessary (I think there’s a premiere inn in Putney). Then once you’ve got it habitable you can save some more money/ wait it out until prices become more realistic. If you read house magazines loads of people take 10-15 years to do houses up gradually- at this point shelve anything which isn’t essential and live with it for a while.

Honestly? It sounds like a money pit and I'd walk away from the purchase. When we did our renovation (north London) our builder warned us that costs could go up once they started pulling the place apart. Fortunately we didn't find any nasties, but based on what you've uncovered so far, chances are you will find more stuff. I'd go ahead with the sale of your flat still if you're getting top whack for it, then rent somewhere until things have calmed down on the market and also with the cost of building projects.

Argh, sorry, I misread. I thought you were about to exchange but you've already done that, it's the flat you're selling now.

I guess all you can do is see if you can get the additional funding and do the non-negotiable structural underpinning etc, then do the rest bit by bit. Or take the hit and sell and let it become someone else's problem.

I would put it back on the market. Surely with the planning in place now and 6 months further on in the market you would get back the £20k you have already spent?

You just need to find another builder. I'm doing extensive works at the moment (similar budget to you - we are adding 130sq m and reroofing) and we are currently on budget and on time. Yes the price has gone up but not across the board (although our steels have been eye watering) but there are lots out there trying to make as much as possible before the inevitable recession. Some of my finishes won't be what I wanted so I've had to forgo the Crittal doors for example and going for porcelain rather than limestone and my husband will have to get the paintbrush out for us but I'm building the space I wanted.

Turn key service is very expensive at the moment though.

I really feel for you OP, I'm stressed just reading this, so can't imagine what it must be like to live it!

Personally, I think I would put it back on the market. You're looking at likely a couple of years of stress and worry, for what is after all, just a house. However much you love it, I think you need to try and take the emotion out of it and think about it in a logical way: would you have bought it knowing what you know now? If not, then sell it. What you've spent/done so far is gone, don't keep spending to make it 'worth it' if it's not a good use of money.

Not the same scale of the situation. But before covid, we went to see a neighbours house who has the same extension that we wanted. They paid around £50k. We are having the build now and it's quoted to just over £90k. But the house price rise has been huge as well in the last 3 years, so we can justify the bigger spend as the ceiling price has also risen by a lot. We have been in the house for much longer so can borrow a larger amount. I think for you, the only choice is to borrow enough to do the necessary work, live there for a bit to build up a fund to do the next step.

We aren't done yet and I have plans to do a bit more but I'm planning that in 2 years. Hopefully prices would have settled down by then.

I would put it back on the market. Surely with the planning in place now and 6 months further on in the market you would get back the £20k you have already spent?

This. I would seriously, seriously consider doing this.

Urgh, same thing happened to us - we got a quote for the work needed to renovate our house 2 years ago, since then put in planning, got the money together etc. and the costs have now DOUBLED. It's mad, it's 100% the material costs both builders we've had to quote are wonderful (one is a great friend of ours) and both were almost identical quotes. They even split out their profit so we could see it's not them being greedy it's just the materials and one was even making less than he would have done before because they are getting less work with the costs being so high. We were temped to move, and got a GREAT office on our house as it is, but then when we went to see what we can get for our money in the open market considering we wanted to really up-size, the costs of buying and stamp duty out weigh the cost of the build and it wouldn't be our 'perfect' home because we have designed our house to be exactly what we want. So long story short we had a wobble and decided to stay and do the work but I feel your pain it's horrible to think how cheap it would have been had we got our act together 2 years ago! x

sorry, offer on our house not office!

In a similar boat. Been messed around for over a year and have just sacked off the builders. Seems they are just plucking figures out of the sky.

Looking at the cost of the renovations and the weighing against the value of the house, it was totally not worth it.

Renovating is more expensive than building from scratch. Especially period properties (I too bought a period terrace). We have been burning through money at a shocking rate and have cancelled as much of the project as we can.

I am going through a renovation now, only loft, bathroom, 3 bedrooms and 1 living room, no extension and its £200k to this point(plaster). We often wonder what we would have done with our life the last 4 months or so. We chose a construction company with a Business Manager and have the budget however nothing has gone as per plan. So many compromises have been made. So even if you have a budget, willing to go through the work for 2 years, it wont be “perfect”. The scale of your house works are massive, even worth to consider to rebuild the house(faster) as stripping out wall papers, plaster, adding new plaster then patch up outside wall, paint, roof, fascia, gutter etc. The renovation dictates our lives these days, we have so little mentality for anything else, every day is about chasing the builder. On Saturday, one was threatening to leave the job just because we told the builder boss that he only turned up till 1pm everyday. And waiting for a replacement means 1 month wait(even this is a big company with alternatives and choices).
So my point is, even if you are willing to pay for it, now it isnt a good time to start with any building work because the markets, even paying premium doesnt guarantee less stress and less compromises.

You didnt mention if you have kids, these years are valuable time and without renovation work you could have a completely different life with them. Speaking from us who both work in the city and did have major renovations with our old house in the past when it was possible to have renovation done if we pay premium with little stress.

Good luck!

So shocked to read this OP. Genuinely jaw-dropping quotes even in the context of architects always wildly underestimating. We last bought an uninhabitable wreck and did a major renovation including structural work 16 years ago, which I realise now was a golden age of cheaper labour and materials in London. We've been thinking about doing it again when the dc leave home, but I'm starting to realise I am hugely out of touch with the reality of current costs. Given that salaries have not risen in line with house prices etc over the last couple of decades and interest rates are going up, I just can't see how renovation costs of £670-700k+ for a terraced house are going to work for the majority of people - surely we're going to end up in a situation where they just won't happen, which will have a knock-on effect on all sorts of industries?

Having said that my current London street normally has a very slow turnover (my neighbours have been here 40 years!) but is going through a phase at the moment of older people selling up (or, sadly, probate sales) after several decades and younger families moving in and renovating. They're substantial 5-6 bed Victorian houses costing £2m ish in an unrenovated state, and I'm now realising that the year-long back-to brick, roof-off renovations they've been having must be approaching a third of that again. I don't know where they're getting the money from.

In your situation I think I'd be tempted to try it on the market with your planning permission in place, but keep my options open for more quotes and/or some of the partial 'make safe and wait' solutions others have suggested.

@whenindoubtgotothelibrary , the reason people spend so much on terraced houses, is because there is nothing bigger or better on the market. I’m also in London, and currently renovating and extending our end of terrace house at a very high cost (though I have nothing but praise for my builder and project manager).

We are adding approximately 120 square metres to our original terrace. If I wanted to buy a house that size in our neighbourhood, I’d be looking at a completely different price point. There is already nothing available between 1.5M and 2.5M in our postcode; but for houses with the space and spec I’m building, I would be closer to 3M, which, even with the higher building costs, is way more than the works are costing us.

And even if I paid 3M, it wouldn’t be exactly to my taste and perfect for our needs. And I’d have to pay at least 250k stamp duty on top, or more. Whereas by extending, we have complete control on what we’re getting, and we’re saving the stamp duty.

And so even though the costs are very high, it still makes economical sense to pay for building works, even on a terraced house.

Another thing strikes me - you mentioned reconfiguring the interiors included staircase. We’ve been told a few times that this is v expensive because period properties were built around some key “spine” walls and the staircases. If these are moving the costs will increase disproportionately.

Is if possible to take your architect’s plans, look at the interior walls that are moving requiring substantial RSJs and see whether these are “nice to have” or can we tweaked instead? For example a large glass interior door might do instead of a completely open space.

Just a thought..

OP, unfortunately prices have gone up a lot since Jan. You said that the finished value of your house will be less than what you spend, is that based on agent valuations or something else. As people spend money on their houses, the prices also go up to reflect that. At least, at the moment. How much did you buy for?

I think the vast majority of houses in London are terraced, including the one I renovated Yellownotblue, so not sure what you mean? I absolutely wasn't having a dig at terraced houses, just remarking that it's a normal sounding renovation of a normal sounding house for London, not a mega mansion.

@whenindoubtgotothelibrary , sorry if I didn’t phrase this right. I didn’t think you were having a dig at terraced houses. I was just trying to explain the rationale behind paying so much money to extend a terrace.

It’s just that the next step up from a terrace, in many parts of London at least, is a mega mansion. So people (that includes me) would rather spend, even in this crazy market, improving their terrace, rather than moving, because there is nowhere to “upsize” to, unless you have millions more. There are no “in between” houses.

As an aside, I’m always amazed at the crazy prices for unrenovated houses. If I’m going to pay 2-3M for a house, I’d like it to be habitable. Not so in SW London, where totally decrepit properties that need a complete overhaul (ie new roof, plumbing, rewiring, asbestos removal, basically strip back to brick and do everything new) and at least another 800K to extend, seem to sell well 🤷🏼‍♀️