Find your home’s real value

Most of us have no idea there can be a vast dif­fer­ence be­tween the value of our homes and the cost to re­build them if dis­as­ter strikes

Solihull News - - HOME ADVICE -

H ow much is your home worth? That’s easy – a lo­cal es­tate agent’s win­dow or go­ing on­line should give you a fairly good idea.

But it’s not the whole an­swer. For ev­ery prop­erty has two val­ues, some­times mas­sively apart.

Be­sides the re­sale amount, there’s the value in­sur­ance com­pa­nies want to cover the build­ing it­self. De­pend­ing on where you live, these can be al­most the same or the in­sur­ance amount could be a frac­tion of the es­tate agent’s es­ti­mate.

In­sur­ers are in­ter­ested in “re­build val­ues” – the cost of restor­ing prop­er­ties to­tally de­stroyed by fire or flood or ex­plo­sion. It’s their bot­tom line.

Ac­cord­ing to Di­rect Line In­sur­ance, typ­i­cal homes in the North East of Eng­land have a re­build value just two per cent un­der their mar­ket value. In New­cas­tle, the av­er­age three­bed­room prop­erty costs £ 160,732 while the re­build­ing value is £ 158,000.

At the other end of the scale, av­er­age three- bed­room prop­er­ties in the Lon­don area go for £ 647,571 but re­build­ing it would cost just £ 205,000.

Across the UK, the typ­i­cal three­bed home costs £ 277,608 while restor­ing it from rub­ble would cost £ 164,917 – around two thirds.

All homes have bricks, tiles, plas­ter­work, ca­bling, plumb­ing and heat­ing sys­tems. Those fac­tors – plus the cost of clear­ing the site if a home is de­stroyed and the labour in­volved in re­build­ing – add up to the in­sur­ance value.

Most of these cost sim­i­lar amounts wher­ever you live – big builders’ mer­chants have the same cat­a­logue prices for all their out­lets. The only sub­stan­tial cost dif­fer­ence is the work­force to re­store the prop­erty – labour tends to be more expensive in Lon­don and the South East than in most other parts of the coun­try.

The gap be­tween the re­build value and the es­tate agency es­ti­mate is due to how de­sir­able the area is – that’s ac­cess to schools, hos­pi­tals, trans­port, coun­try­side, shops and all the other items you look for when de­cid­ing where to buy – and the value of land, which can’t be de­stroyed.

To use the ti­tle of that TV series, it’s “Lo­ca­tion, Lo­ca­tion and Lo­ca­tion”.

Di­rect Line says: “The pub­lic has lit­tle to no idea of re­build costs, es­ti­mat­ing it would cost an av­er­age £ 226,750 to re­store a three­bed­room house – 38% more than re­al­ity.”

In­sur­ance firms are only in­ter­ested in what it will cost to re­build your home

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