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?!

So sorry for the lack of response - we’ve had a bit of a call to arms and some serious decision making to do. Have met with the builders who tendered too and the people who had quoted the lowest had left a load of stuff out even though it was in the pack so a watch out for others - if one price is significantly lower than the others there’s usually a reason.

We’ve decided to go ahead and I’ll explain some rationale why incase it helps anyone but it’s broadly in line with with what @Yellownotblue said:

• We can’t afford the house ‘done’ so if we sell and look to buy somewhere that’s habitable it won’t be in this location. In honesty we never thought we’d be able to afford to live in this part of London but we got very lucky with this house (it came to the market 4 weeks before Xmas when no one was looking and in January we would have been gazumped by £150k if we hadn’t exchanged on Xmas Eve). We weren’t even looking to move but got offered a crazy price off market for our flat
• Ridiculous numbers for anywhere outside of London but the house was on at £1.4m and we bought it for £1.25m - it was a very sentimental sale for the person selling it who was very concerned about it not being converted in to flats or sold to a developer but in this area it’s unheard of that properties like this in the current market are going under asking price. This was the lowest registered sale price for a house in this area in over 10 years - we definitely could have resold it for a higher price
• Houses that have sold within the last few months in the area have sold for anywhere between £1.7-1.9m which we absolutely could not afford the mortgage and stamp duty on - we’ll be getting something that is to our taste in an area we had written off we’d ever be able to buy in.
• We will not make any money on this house and we may lose money if we assume the prices don’t rise but this is where we see ourselves for the next 10 years (@whenindoubtgotothelibrary possibly longer as like your street so many people have been there for 20+ years - no one seems to leave which is hopefully a good sign). If we couldn’t afford this area we’d probably stay another 5 years in the area we live now (a ‘done’ house where we are now is £1.4-1.5m) but we wouldn’t be here long term as it’s too noisy/busy so would move out at some point so I’m viewing this as it saves us another round of stamp duty at some point.
• We have found a builder who is going to value engineer the architects plans over the next 2 weeks to see where we can make sensible savings but we are going ahead with doing all the works at once with a view to getting the highest value in the shortest time period so we can revalue it and get on to a better mortgage rate (another total mind boggling factor).
• We are taking the absolute maximum mortgage which is eye watering/uncomfortable/terrifying but know that this is how people are buying houses these days in London and that even after we pay our bills we’ll still have more than some households have and will not struggle to pay current bills
• We’re binning the rent budget and moving in to a building site once we complete on our flat. Not ideal but with prices where they are forking out £15k on rent feels like an obvious saving

Been a stressful couple of weeks and really feel for anyone who’s started this process and getting mega stung at the moment. We’re fully preparing ourselves for having to significantly change our build plans (only doing the shell of the loft and not fitting it out, not doing the side return depending on what else we uncover). Thanks so much for everyone’s amazing advice - this process isn’t for the faint hearted! I overheard an estate agent trying to sell a wreck a couple of streets away from us saying ‘it needs a couple of hundred thousand spent on it and you’ll then be sat on a huge profit’ and I wanted to tell him to shut up. London builders are so busy at the moment and are not interested in coming out to price a house for someone who’s not actually bought the house yet (they weren’t when I was trying) so feel for people who are buying wrecks right now. The BCIS (builders construction index) is forecasting labour and material costs to continue to increase until 2024 - that’s not accounting for the additional strain on supplies when China reopens - I honestly don’t think prices are coming down anytime soon.

Thank you for the update. We try to give useful advice on here but only you know the full facts of your situation. It sounds like a good idea to scale back on your architects plans to make them affordable but to proceed with renovating the house as it will obviously be worth a lot when you are finished and sounds like the perfect house for you minus the renovation costs!

We did a living in it renovation because we couldn't have afforded the house if we didnt. No major building works but it was derelict with black mould and no heating and limited electrics when we moved in. We have slowly done it room by room and are nearly done 4 years in. The beginning was hard but it has been worth it and we love loving here. Keep your eyes on the end goal and enjoy every little improvement as it gets done. And treat yourself to stuff when you need to like an occasional meal out or night away. Good luck. You will end up with an amazing house which you love eventually!

As an example, we carried out a small self building garden project in march/,April this year. At the time a 25kg bag of cement cost us about £4. We've just started another project and cement is £7.60 per bag.

That's one item, most supplies have gone the same way, so I can see why builders quotes have doubted.

Cement is £6.10 at wickes ( paper bag ) and £5.98 b/q

I’ve been buying a lot 1800mmx100mmx25mm pressure treated timber over the years, it was always about £2.50 a length. It increased to £4,05 after lockdown.
i went to buy some on Saturday and it was down to £3.08.

Steel is still really expensive and hopefully will start to come down in price soon was quoted £490 the other day for some posts from my usual place. , after a while I managed to get them for £380..
lots of people will tell you material prices have doubled but it pays to shop around.

builders just tend to use the local merchants and won’t spend/have the time to find materials cheaper.

I’d honestly look at remarketing the house for sale. We got stung big time with architect “estimates” being woefully unrealistic!! Ours didn’t care either!! She didn’t even care when we found out mid-renovation that she fucked up the staircase measurement by 30cm, as apparently her drawings were “design-focussed”, rather than intended to be exact measurements 🤦🏼‍♀️🤦🏼‍♀️🤦🏼‍♀️

Our building work is done now, thank goodness. It was so much more expensive and stressful than I imagined. Also the time estimate of 11 weeks actually became 28 weeks!!!! The stress and cost of living in Airbnb, then with family for the extended time, was dreadful. 4 builders had told me 12 weeks and I actually discounted 1 builder completely because he estimated 22 weeks 🤦🏼‍♀️🤦🏼‍♀️🤦🏼‍♀️

I think I have PTSD from the experience. I don’t mean that lightly either.

My very painful experience. House renovations during 2021. Budget for renovations 700k ended up costing 1m and not due to upgrades but mainly Imcomplete description of the scope of work done by our very expensive architect. We did downgraded a lot of things but still the contractor increased the prices massively in things that were not quoted originally but necessary to finish the job. The amount of money and stress is not worthy. I wish I could go back in time and be in the situation that you are in and take the loss of 20k. Consider it as a stop loss

This seems to be a zombie thread. But as someone facing a major renovation, I wonder how things went for you. I'm also zone 2, but bought the house post Liz truss so at the top end of interest rate and also what I consider a good deal given not a lot of interest at the time.

@Lemonbalm8 we have been living in the house for just over a year and it’s been worth it but it was also a mission to get here. We bought it in Jan-22 and moved in end of Jul-23 and during that time lived out of London with family as rental prices went crazy here and we couldn’t afford both. Everyone says leave a 15% contingency pot but we’ve spent 30% more than planned. We were left with 4 walls and had to take everything out including floor joists so it was like an empty shell with no floors or stairs and dug an existing basement so it was a lot of work but it is worth it now. We spent an obscene amount of money but had the house valued and we won’t lose money but unlikely to make any but we’ll be here for the long term

Thank you for sharing. Is that 30% on top of the X2 that was quoted by builders or 30% on original architect/design cost estimate?

I've done some work and already spent double what I thought my budget was, but did more. Still so much more and spiralling. I'm doing tracking on excel and it's not detailed enough, I'm addicted to renovation and one job leads to 10 and finally new issues keep cropping up every month. It's tough to keep up mentally.

It sounds like you are doing things the right way though and getting the order of stuff right, as there is no point in making the house nice if it needs redoing. Hope it's livable now? Do you have heating and electrics done yet or still on structural work?

Oh my word that's alot of work and alot of money!

I know materials have gone up enormously. I was quoted £900 for some lead to go on top of a mini bay window so we are not having that.

What is the price if you just make it habitable for now?

We renovated our largish house for around £30k. Everyone except bathroom and full electrics. What was really heavy was that our painter and decorator had a lot of decent contacts who he knew would do a good job without costing the earth

Ooh you must have been on Homes under the Hammer. The developers on there always seem to be able to renovate whole houses for 30k or under.

We were quoted about 600k (full big renovation) ball park at the start. I reckon it will come in around 1mil if we're lucky. Things just escalate - one thing leads to another etc. Hopefully we will be here 20 years but if not it's really not sensible.

I'd never do another renovation.

May I ask is this in London? Are you spending that much because you bought derelict in amazing location or because you're building your dream home?
I am project managing and hiring each trade. With young children, and childcare costs being high, I don't know how we will get there. It seems to be I'm very optimistic person which is why I got myself in this situation 😂

I agree with @PebbleSky and the other 30% overspend. The chances of this reno coming in at the already high figure quoted are extremely low. Then you have the redecorating and furnishing costs. We have done a massive renovation and I wouldn't again either. We did know price wise what was likely as work in the industry. Mammoth task. Project management sounds ok until you have your first materials/ labour dispute. I would consider backing out now if you haven't got the resource for it as it is not easy to stop once you have started and the process is bad enough without running out of money. Very sorry to hear about the situation. I think architects, estate agents and wider attitudes are far too optimistic about building and building costs which leads to some pretty problematic expectations. The days of reasonably priced generally affordable renovation is long gone.

@Lemonbalm8 how much have you got left to do? Is it liveable yet, are you in it?

Just coming to the almost end of a full renovation and extension. Still have some windows to replace, some decorating, and a bathroom to do. We will come in slightly over budget by about £25k. It was worth it for us I think, we have something just how we wanted it, which we couldn't have afforded to buy done., plus the extra stamp duty etc. It did end up almost double the initial ballpark figures given by the architect and builders pre building regs drawings. But this seems common.

I let the builder crack on with all the structural stuff, extension, moving the stairs etc. I couldn't have comprehended the materials needed for those and when, and who to have on site when etc. we saved thousands getting our own electrician, plumber, tiler, floorer etc against the builder quote for these items. I found a builder ourselves - both times when the architect has put it to tender for us, the quotes have been HUGE! How we have saved money also is sourcing deals online, then calling those companies up and asking for extra discounts if we order bulk. Flooring, stone counters, appliances, stairs etc. Weirdly builder making bespoke utility, under stairs cupboards, storage etc has come in way cheaper than buying the cupboards ourselves. Highly recommend Hamdmade Kitchens of Christchurch in the 50% off sale. It looks amazing once painted, I can't tell the difference between it and the very expensive kitchens we looked at which were 3x the price

@Lemonbalm8 no, we're in the North. It's just a really big project and we're trying to make the house as sustainable as possible (ground source heat, breathable insulation and lime plaster) which massively bumps up the costs.

yes and of course if it's old and/or listed, everything is harder as well. Sounds like an incredible mission and if you can make it, it'll be one of a kind.

@PebbleSky I am doing a similar energy efficient renovation on a Victorian house. I stalled for over a year after miving back in as I literally ran out of steam. And cash. Just getting going again now. I am using individual trades.

@vera16 we're starting to break up the work packages a lot more as it feels like you're more in control that way. We're not down to individual trades as we need a main contractor to manage the heat pump, ufh and ducting at the same time.

Yes that’s similar to our project (London though). Good luck with the build - my only advice would be:

• splurge on windows. We had so many problems with cowboy window installers. It set our project back months. Give me a firm like Maxlight that does everything in house and with true professionalism. It’s worth its weight in gold.
• make sure your plumbers are genuine pros. We spent the best part of a year dealing with boiler and plumbing issues caused by a clown subcontractor. Leaks in underfloor heating. Leaks in walls. Boiler depressurising. Weeks without heating in winter. No hot water. Etc. I’m amazed I’m still married as the stress was intense.
• It’s really hard to find builders with a green agenda. We were absolutely adamant we would have a heat pump, but we never managed to get someone willing to put one in. They all said it wouldn’t work, house was too big, yadda yadda. So now we have solar panels instead. And super insulation.
• Custom made joinery is eye wateringly expensive. I was quoted £120k-200k only for joinery (not including kitchen or stairs). You have to decide what you want to spend it on. In the end, we have a lot of ikea cupboards with bespoke fronts from Superfront, Noremax etc. They look utterly gorgeous.
• I designed the pantry and laundry rooms using DIY kitchens, and they are amazing for the price. I get lots of comments (even a few tears!) at how gorgeous they are. Conversely, while I spent a lot on my kitchen, nobody cares about the brand or whether cabinets were hand made etc. 🤷🏼‍♀️ (hint: they were not ☺️)
• everything else, you can wing it - I loved bagging bargains by shopping on eBay, Chinese trade platforms, IKEA, etc. A lot of what people comment on, are bargains I picked along the way. I also bought a lot of furniture at auction, and learned upholstery. Ebay and the.saleroom.com are great places to buy stuff.
• snagging takes forever to fix. We moved back in nearly two years ago, and still waiting for things to be fixed. It’s infuriating.

@PebbleSky we were exactly the same. Quoted £600k at the start and our final bill was £900k.

Our initial quote was pre-Ukraine war and we were weeks away from starting the work and the builder said £875k because materials costs had gone up. I didn’t believe him and lost him, had to retender and ended up being £900k. That included our kitchen, utility room, living room and all bathroom joinery too (3 x bespoke bathroom vanity units) and all our flooring, tiles etc so this was everything and this was a full rip out - nothing including floor joists or staircase could be salvaged. Everything was rotten. We won the lottery with our builders, everything was finished, they hung lights for us and hung curtain poles so we moved in to a fully finished house but this is a rarity.

Yes we are in! We moved in July-23, we got the keys in Jan-22 and never lived in it. It was completely derelict / black mould in every room / not remotely habitable.

We got planning in April-22 and should have been starting the build then but the builder said he had to increase the price and I thought he was at it. We then re went out to tender so didn’t start the build until Jun-22