The construction industry is one of the first places to experience inflation, we saw this coming well before most regular people in the UK.
It takes a long time to plan any construction project, so I want people who are thinking about extending their homes to have realistic information now. This post will give you some real world costs and help you to plan your project. And if construction costs change significantly in 2023, I will make another follow up post.
I will use a house extension project which involved very little work inside the existing house. I want to give simple square meter rates, which you can apply to your house extension project in 2023. If you are planning a substantial internal alteration to an existing property, square meter rates don't work. The only way to accurately price an internal alteration project is to itemise all the individual elements and price each one, it's much more difficult.
I’m going to use this house extension project as an example. it was built back in 2012. Over ten years ago!
I will set out what this would cost to build today, assuming basic interior fittings and finishes to keep the overall cost as low as possible. And I will also share what it originally cost to build. So if you want to see how much construction costs have inflated over a decade, read to the end.
I also assume that you will hire a small to medium building firm to carry out the work. I will explain what that matter to the costs later on.
This house extension is typical of the kind of project I work on. Its an L shaped, wrap around extension to a mid 20th century semi-detached house. The only change we made to the existing building was to cut down part of the rear wall and incorporate the kitchen, into the new open plan space.
I will look at the entire cost for doing this but I will also separate the kitchen and demolition work out and give a square meter rate for the new structure. To make your calculations as simple as possible.
I broke the work down into two sections. Builder work costs and supply costs.
The builder work costs itemise the main elements of the building and show the cost to fit things like the radiators, tiles and the kitchen.
The supply costs are self explanatory, this lists the purchase price of things like the radiators, tiles and the kitchen units. For simplicity sake I have not costed the supply of materials such as concrete, bricks, timber, and insulation, these are included in the various elements in the builder work section.
Under the total for builder work there is a section called preliminaries. This is the cost of things needed to build the project but which do not remain in the finished project. Things like insurance, management costs, skip hire and scaffolding. The going rate is anything between 5 and 15 percent with bigger firms charing more. Ive put this at 7%.
Below the supply cost total there is a section called handling charges. This is what it will cost you to have the builder oder specific items on your behalf. Ive seen these vary from single figures up to 20% in some cases but 10% is not unusual.
Now I can imagne some people feeing triggered by this information, so please don't have a go at me. I don't want to hear about how your mate Bob from down the pub built an extension and didn't incur these costs. The purpose of this post it to show the average homeowner in the UK how the average building firm in the UK operates. So that they understand how the system works. I didn't create that system, this is just the world we live in.
Your mate Bob from down the pub might have got a great deal but that isn't something the average UK homeowners can replicate, while hiring a building contractor is. If you want to avoid preliminaries altogether you would have to become the contractor yourself. Ordering materials, hiring staff and arranging the sequence of work. Which is not something I advise unless you have years of construction experience behind you and a network of mates in the trade to call on when you need help.
It is more realistic to reduce handling charges by ordering things like the kitchen units, glazing, flooring and tiles yourself. My clients normally order the kitchens and glazing themselves. If you think about this from the contractors perspective, a handling charge makes a lot of sense. Take tiles, for example. The contractor has to measure the area of wall and floor accurately, allow for any wastage because tiles never line up exactly with corners or junctions. They have work work out the quantity of grout, sealant and beading as well. They then need to order all this, arrange delivery, store it safely on site, check it all to make sure the right stuff has been delivered and nothing is broken or missing. If something is broken or missing, the contractor has to go back to the supplier and arrange a replacement. All this takes time and that time has to be paid for, and its not cheap.
Typically, a smaller firms charge lower preliminaries. But smaller firms usually take longer to carry out the work. Ive recently been working with a larger building contractor, they have an office with staff, a workshop where they make doors, windows and stairs. They have full time proejct managers and several experienced foreman. If anyone is sick or on holiday they can always provide a replacement and any variation to the project is priced rapidly by a full time estimator, so you know the cost before the work is carried out. All this costs money and that firms preliminaries are much higher that small building firms. typically 15% or more.
So now we have an overall figure for the project of £136,839 + VAT.
It is common practice for UK contractors to list prices exclusive of VAT. There are lots of reasons for this but the main one is that the chancellor can announce changes to VAT with no notice, so keeping prices exclusive of VAT is best when planning something month in advance. Like a house extension.
If we took the kitchen out of this, the extension alone wold cost about £2,750 plus VAT per square meter. Keep in mind this is using reasonably cheap fixtures and fittings. If we upped the spec to include underfloor heating, aluminium frame glazing, more electric fittings, porcelain tiles and hardwood flooring, the cost per square meter would get up to four thousand pounds per square meter plus VAT.
Increasing the spec of items like kitchen units and tiles, would also increase their fitting price, as they usually require more expensive tools and more time to install.
I always advise my clients to keep an additional sum of money aside, this is know as a contingency fund and would be used to pay for any unforeseen items or extras. I usually suggest this sum be 10% the construction budget, but it definitely shouldn’t be any less than 5%.
So in this case the client should keep at least £7,000 spare, just in case. The good news is that the things which lead to the contingency fund being spent are often found in the first month on site. Typically when the contractor starts demolitions and excavating. Things like unexpected drains, cracked foundations, lead pipes, defective electrics and rotten timbers can all require extra money to be spent to put them right. The good news is that if the contingency fund doesn’t need to be spend, you can either keep it or use it to buy better quality fixtures or finishes later on.
Now I said at the start that I would show how much this project originally cost.
Back in 2012 this job cost £85,000 plus VAT. Over the past 10 years the cost of this extension has risen 61% and the vast bulk of that inflation has been over the past two years.
If you are thinking about altering or extending a house in the UK and want to know all the problem areas, and opportunities, before you start, get in touch and book a consultation with me.