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Feature: How much will your new build cost?

By Mark Morris, planning consultant and comms manager at Urbanist Architecture

A house is likely to be the most expensive purchase that most people make – and that is even more likely to be the case when it comes to building a house. Even for those who do make other big-ticket purchases, very few will involve so much uncertainty all the way through, compared to building a new home.

It is incredibly important to pull together an estimate as early as possible in the process – way before buying the land. After all, it’s important to know if you can afford to do this at all – while adding in a large contingency fund. All the way through, as you progress through surveys and feasibility studies, through planning and building regulations approval, and finally to construction, you need to keep updating those figures. Not least because even the smallest construction project can be years rather than months from conception to completion, and we all know how dramatically the world can change in that time.

For that first, crucial estimate, there are calculators available online, which can help. At Urbanist Architecture, for example, we’ve put together our own, which uses cost-per-square-metre as a starting point, but adds in a number of variables, including which part of the country you are in, the build quality and the number of bathrooms.

It provides that initial sense of what you are going to have to spend. Of course, there are factors they can’t take into account – for instance, if you are planning to do some or all of the building yourself, which could bring the costs down considerably. Equally, they can’t anticipate what you might find when you start excavating and how that might affect the length and cost of your build.

We also need to say that there are many recent events – Covid, Brexit, global supply chain problems etc – that have made starting a building project in early 2022 more expensive than it would have been a year ago. The Office of National Statistics said in September that construction output costs were running at an annual growth rate of 3.8%. Some forecasts for the next few years are predicting up 6% inflation each year with some projects facing even higher rises.

So, our view is that even more than ever, you can’t afford to be optimistic about build costs. Especially because beyond all the short to medium-term price pressures, there are also more permanent ones. There are many laudable policies that can nevertheless make building a home more expensive. We’re talking about making sure buildings are accessible, requirements for homes to have much lower water usage and be lower carbon. Over the course of the life of the building, these may well pay off.

Say, this is a house for you to live in, and you intend to live there for 20 or 30 years, then you may well benefit from lower bills over time. And if the house has been built to be fully accessible, you’ll probably appreciate that you can move around freely as you grow older. But right now? All those things are higher costs that need to be taken into consideration.

So, let’s look at an example: a four-bedroom, four-bathroom house in the south-west, with a gross internal area of 150 sqm and with the build quality set at ‘good’. A decent-sized family home, then. Our calculator puts that at £430,000 for the build cost. On top of that, we’d recommend setting aside a sum equivalent to 15% of the construction cost for professional services and at least 8% for contingencies and other costs. Right now, though, we’d advise adding a 10% coronavirus/Brexit buffer to that £430,000 and having a larger contingency if you can, or at least knowing you’re not committing all your financial resources to the project.

And you should always be conscious that when you say bathroom and we say bathroom, we could be talking about something that’s different to the tune of £25,000. So, if you are expecting a shower you can control with your phone and kitchen work surfaces quarried in Italy, you need to be aware of what those details will add to the final sum.

That’s why your projected cost needs to constantly fine-tuned as you have conversations with architects, quantity surveyors, suppliers and building contractors. Unless you are incredibly lucky and have a budget bigger than your desires (a rare thing indeed!), there will be compromises all the way through.

It’s also why we advise doing more of your thinking earlier on in the project than many people want to – they expect to hear a realistic full price without having worked out the details of what they want. But if you commission a full feasibility study, then approach the council with a fully designed house at the pre-application stage, you will also be getting a better sense of eventual costs earlier on.

So: do your homework, use our calculator, pay professionals to start looking into things at an early stage – and constantly update your projections as more information comes in.

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