ChrisB

I bought my house two years ago and had a survey done. That said the rebuild figure for the property was £x.

I am now changing my mortgage and the new mortgage company had have a valuation performed.

They are now saying the rebuild cost is 2 * £x

How the heck has that figured doubled in two years? I would argue their rebuild cost is the sale value.

Is it possible that the original figure was wrong? Is there a rough relationship between the value of the property and the rebuild cost?

Chris.

scoobyjimbo

I would have expected it to have gone up slightly but not doubled.. how odd.. usually rebuild cost is around 50% of value of property, but that is a rough guide, it depends on the quality of fittings etc..
J

fast bloke

rebuild cost and value are generally unrelated - A 2 million quid detached mansion in the South East wont cost 40 times more to rebuild than a 50k terrace in Belfast. Much of the value of your property is the actual site, but values and rebuild costs are fairly subjective. If the rebuild cost is less than 500k, get your buildings insurance with L&G. They are pushing B&C hard at the minute and price v's cover is very good

ChrisB

Cheers guys.

It remains relative / related surely though? 50% rebuild cost is £1m vs £25k...

richardg

the rebuild cost for insurance purposes is the cost of rebuilding the property as it was before the rebuild became necessary, less the cost of land and a few other bits - can't remember the detail. ie, exactly the same, with the same services, the same materials (or similar if some have become deemed as 'deleterious' etc. this is not directly related to value. if the "value" of a house is £150k, then the land is worth probably approx £50k. that doesn't mean that the rebuild cost for insurance purposes is £100k, it could be a 1,000 sq ft house which may cost £120/sq ft to rebuild or if it's particulalry ornate in places, with a cellar and welsh slate, a listed building etc, then it could cost a lot more (ie more than 2/3 of the value). there are so many variables, you need to speak to someone in your road who has bought recently. ask if they'll give you the rebuild value their surveyor quoted or alternatively ask a local chartered surveyor for a fee quote for this service.
THE ABOVE FIGURES ARE FOR ILLUSTRATION ONLY. THERE ARE A GENERAL RULE OF THUMB (NOT THE BUILD COSTS - THEY WILL VARY CONSIDERABLY DEPENDING ON LOCATION, SPEC ETC). Remember if you get the figure wrong, then your insurers will only pay out the max that you've insured for.
take a look at this - http://calculator.bcis.co.uk/index.cfm#calculatornotes

jasey

It's probably got more to to with the availablity of someone to actually rebuild the house.


Then again - it's more likely to be mortgage company in shock ripping off customers story .

Here's a question for you - Why do you need to get a mortgage valuation for a new house ? We had to get one done and the valuation was provided before the house was built ???

richardg

related to some extent as labour will generally be more expensive in areas where house prices are more expensive, rent will be more expensive for offices (hence the builder will have higher overheads) etc etc, hence this will have a knock-on effect with build costs. in theory, it's cheaper to build in the suburbs than in the middle of a city (parking, loading restrictions, space restrictions etc all have an influence on cost)

Dream Weaver

Most of the cost of buying a decent house is based on area, so the rebuild cost isnt really relative to house value.

As an example, 2 detached houses, similar in size will cost the same money to rebuild, say £75k. In nice area 1 the detached house in question may be valued at £300k, but in average area 2 the house may be valued at £150k.

They would both cost the same to rebuild, but 1 is twice the value of the other.

Doesnt help you out in this case, but thats how I see it working - it has no bearing on area, just purely based on how much it would actually cost to rebuild it.

ChrisB

Thanks Richard - that's very helpfull.

Is that directed to me? It's not a new house, just a re-mortgage.

richardg

no probs. the RICS (www.rics.org) publish an index of construction costs i believe. could take a look on their site for this info

dream weaver - whilst rebuild prices are not directly related to value, the general pattern is that a builder will charge more to work in an area where values are higher than vice versa. shouldn't be the case in an ideal world, but we all have to make a living! (and no, i'm not a builder!)

hawkthescoobslayer

just had a similar experience, went to get a new mortgage deal and the bank have revalued tthe house for mortgage purposes, the re-build value is now £125,000 MORE than we paid for the house 2 years ago

fast bloke

The terrace would probably cost more than its actual value to rebuild while the mansion might cost 50/60/70% of its actual value. (This is based on doing loads of remortgages and getting strange rebuild costs from surveyors - it maybe only applies in Belfast where there are some areas that people refuse to live, so the house prices for reasonable houses are really really low)

jasey

I'm happy to throw the question out to the great unwashed .

Always puzzled me why you need to pay someone £150 to put on a piece of header paper what everybody already knows ??

fast bloke

The valuation is required by the lender to ensure that the property is good security for the mortgage. The rebuild cost is required so they they can insist you have an adequate amount of buildings insurance to protect that security

gsm1

Unless your property is listed or unsaleable, in today's market, the rebuild figure should not be above the value of the property.