Should you de­mol­ish & re­build?

Project man­age­ment ex­pert Mike Hard­wick takes a look at the ben­e­fits of this pop­u­lar route to a self build plot – and what you need to con­sider be­fore you buy

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Mike Hard­wick on when it makes sense to take ad­van­tage of this pop­u­lar route to cre­at­ing your dream home

It might seem a lit­tle coun­ter­in­tu­itive to take a per­fectly good house and knock it down to build a new one in its place. Why not ren­o­vate, ex­tend or bolt an­other storey onto the ex­ist­ing build­ing? Surely that would make bet­ter sense fi­nan­cially? In some cir­cum­stances this is the case and, of course, a lot of peo­ple choose to take the home im­prove­ment route to great ef­fect.

How­ever, in many parts of the UK knock­ing down and re­build­ing is by far the most cost-ef­fec­tive so­lu­tion – and in ar­eas where in­di­vid­ual plots are rare, it is of­ten the best way to se­cure the home that you want. Here, I’m look­ing at the pros and cons of knock­ing down and start­ing again.

Why de­mol­ish & re­build?

Houses can’t last for­ever. Many of the homes now avail­able on the open mar­ket were built be­tween the late Vic­to­rian pe­riod and the mid-1970s. They were de­signed and con­structed for very dif­fer­ent gen­er­a­tions, with com­pletely dif­fer­ent ex­pec­ta­tions in terms of life­style, com­fort and en­ergy ef­fi­ciency. What’s more, prior to 1948 (with­out the in­flu­ence of mod­ern plan­ners) any­thing went – so there are some pretty ec­cen­tric prop­er­ties out there, which can be hard to sell.

This old stock com­prises largely of houses that were orig­i­nally built with no cen­tral heat­ing sys­tem and lit­tle or no in­su­la­tion. They typ­i­cally have much smaller rooms, each with a spe­cific func­tion but of­ten with­out the crea­ture com­forts and flex­i­bil­ity we have come to ex­pect from mod­ern de­signs. Plus early prop­er­ties in this pe­riod didn’t even have a bath­room, let alone an en­suite (see page 90).

What they did have, at least in more ru­ral lo­ca­tions, was land. If you had plenty of this be­fore the Town and Coun­try Plan­ning Act came into force back in 1947, you could ba­si­cally build what­ever you wanted on your own prop­erty. So this of­ten meant that – by mod­ern stan­dards – rel­a­tively mod­est homes were be­ing built on very gen­er­ous plots.

The usual can­di­dates up for re­place­ment are bun­ga­lows and de­tached houses built be­tween the post-war aus­ter­ity era (so from the late 1940s) and the decade that ar­chi­tec­ture for­got (the 1970s).

Are any prop­er­ties un­suit­able for re­place­ment?

Ob­vi­ously, ter­raced houses and even semi-de­tached ones are trick­ier to re­place, as you will usu­ally need to se­cure con­sent to de­mol­ish and re­place sev­eral homes at once. With­out the agree­ment of ev­ery­one,

Above: De­mol­ish­ing an ex­ist­ing struc­ture is a rel­a­tively in­ex­pen­sive un­der­tak­ing – and can give you the chance to cre­ate a larger, to­tally be­spoke home

that’s not go­ing to hap­pen. Some ter­race ren­o­va­tions in high-value ar­eas in­volve gut­ting the build­ing to lit­tle more than the ad­join­ing wall and the fa­cade – but this kind of project won’t count as a full self build for VAT pur­poses (more on this later).

You also need to con­sider whether older prop­er­ties with char­ac­ter would be bet­ter off be­ing re­fur­bished rather than re­placed, as there is still a strong mar­ket for pe­riod houses (see page 85). What’s more, ex­am­ples with his­tor­i­cal or ar­chi­tec­tural sig­nif­i­cance will have been pro­tected by the listed build­ings scheme – although there are still a huge num­ber of char­ac­ter­ful prop­er­ties that have not been listed. You’ll soon find out if you have a build­ing that has fallen through the net, as preser­va­tion or­ders can be ob­tained quickly if some­one spots a struc­ture about to be de­mol­ished that should be saved.

An in­ter­est­ing point some­one made to me re­cently was that you rarely see an oak frame house be­ing re­placed. They tend to be built with longevity in mind, prob­a­bly cen­turies, while most mod­ern homes have a de­sign life of 60-80 years. It’s not that your home will fall down at that point, but more likely that tastes and life­styles will have evolved so much by then, it’s time for some­thing new.

The fi­nan­cial case for re­plac­ing a house

If you look at the value of build­ing plots, you’ll of­ten see that they cost as much or of­ten more than the price of an ex­ist­ing prop­erty on the open mar­ket – par­tic­u­larly in the south east and south west of Eng­land, where de­mand is high­est. This is be­cause the value of land is not dic­tated by what is cur­rently on it, but more to do with what could be there if the plot was prop­erly de­vel­oped. So while it may feel a bit odd of­fer­ing to buy a house with the in­ten­tion of im­me­di­ately throw­ing it away, it’s not as daft as it sounds.

De­mol­ish­ing a prop­erty is not that ex­pen­sive. I would bud­get around £8,000-£10,000 to knock down a three bed­room bun­ga­low, and half as much again for a larger house. Grav­ity does most of the work and the main cost is to do with dis­pos­ing the waste. You will need to have build­ing con­trol ap­proval to go ahead and de­mol­ish, which will en­tail the com­mis­sion­ing of en­vi­ron­men­tal and as­bestos sur­veys be­fore any work com­mences.

You might be able to sal­vage some ma­te­ri­als from the struc­ture, such as tiles and pe­riod fea­tures, but don’t Above & top:

Peter and Donna Granger played the wait­ing game to get plan­ning con­sent to knock down a se­ries of stor­age struc­tures on the green belt plot they bought in the early 2000s and re­place them with a new home. A change to plan­ning pol­icy in 2012 gave them the lucky break they needed, with the cou­ple ar­gu­ing their Scan­dia

Hus build would im­prove the area

Right: Af­ter two years of search­ing for a prop­erty suit­able for a ren­o­va­tion project, Stephanie Rogers and John Bear­man found a three­bed­room, 1930s house in Es­sex of­fer­ing a very dif­fer­ent project op­por­tu­nity: a knock-down and re­build. Their new be­spoke home cap­tures some of the orig­i­nal’s Arts & Crafts char­ac­ter, while pro­vid­ing mod­ern stan­dards of com­fort and en­ergy ef­fi­ciency

think about keep­ing the foun­da­tions. I’m of­ten asked about whether they can be reused and the answer is pos­si­bly, but don’t bother. They will not be to mod­ern stan­dards and will limit the de­sign and lay­out of any new prop­erty, so it’s best to start again.

A word of cau­tion here; make sure if you’re bor­row­ing that your lender is happy for you to de­mol­ish and re­build the prop­erty, be­cause fi­nance is of­fered against the ex­ist­ing struc­ture in most cases. Seek the ad­vice of a spe­cial­ist self build mort­gage bro­ker if you’re in any doubt.

VAT for ren­o­va­tion ver­sus re­build

The clincher – and the key rea­son why de­mo­li­tion and re­build trumps re­fur­bish­ment or ex­ten­sion – is the VAT sit­u­a­tion. You can re­claim on the ma­te­ri­als used to build a new prop­erty and labour is zero rated, but work on an ex­ist­ing struc­ture at­tracts 20% VAT on both ma­te­ri­als and labour.

It doesn’t take the brains of an arch­bishop to work out that the cost of de­mo­li­tion, and pos­si­bly the de­sign fees, will be less than the tax bill for do­ing a ren­o­va­tion. You might even end up with some cash left over that oth­er­wise would have gone to the Chan­cel­lor. The rules say that you can keep one, or some­times two ex­ter­nal walls of the old prop­erty and still claim the VAT back as a new dwelling – but it’s worth check­ing that this will be ac­cept­able be­fore go­ing ahead.

Other ben­e­fits of de­mol­ish & re­build

Any ex­ist­ing prop­erty is likely to have ac­cess to the ser­vices that you will need for your re­place­ment dwelling: elec­tric­ity, water, foul drainage and pos­si­bly mains gas. These ser­vices can be iso­lated be­fore the house is knocked down and re­con­nected to the new dwelling. If you con­sider the cost of get­ting ser­vices to a vir­gin plot in the mid­dle of nowhere, then this can rep­re­sent a sig­nif­i­cant po­ten­tial sav­ing.

There are also bonuses, such as the fact ease­ments and wayleaves for man­ag­ing the prop­erty will al­ready be in place. The same is true of rights for ve­hic­u­lar and pedes­trian ac­cess – this is of­ten over­looked on new plots and can be ex­pen­sive and time­con­sum­ing to ob­tain.

Of course, your new home will also be far more com­fort­able and ef­fi­cient than the build­ing it is go­ing to re­place, with an in­ter­nal lay­out that meets your ex­pec­ta­tions for mod­ern liv­ing.

Does knock down & re­build work ev­ery­where?

As with any kind of project, you’ll need to do your home­work re­gard­ing the fi­nan­cial and le­gal vi­a­bil­ity of de­mo­li­tion and re­place­ment. Where plots are in rea­son­able sup­ply and there­fore rel­a­tively in­ex­pen­sive – parts of Scot­land spring to mind – there’s lit­tle point go­ing through the rig­ma­role of knock­ing down and re­build­ing. In these cases it’s much more straight­for­ward to just find a nice plot and start from scratch.

The same could be said for parts of south Wales and the north of Eng­land, where the price of houses on the open mar­ket means the up­lift in value from re­place­ment is be guar­an­teed.

There are no hard and fast rules, though, and in hotspots through­out the coun­try, the num­bers can stack up. In the south of Eng­land, more of­ten than not, they do – but you can get caught out if you pay too much for the prop­erty you in­tend to re­place.

Be­fore & af­ter

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