Renovate or knock down and rebuild: which is more cost-effective?

When does a demolition and rebuild project make more sense than a renovation? Industry experts share their knowledge to help you decide which option is best for you to create your dream home

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Many people who have taken on extensive renovation projects will joke how it would have been easier to knock it down and start again with a self build. While there is often truth to this, it can be complicated weighing up the financial and practical implications of renovating over rebuilding. 

If you have taken on a project that needs a lot of work to make it into a home that will work for your, this article will help you decide which is the best course of action – renovate, or replace?

When is it best to renovate

When you’ve found a run-down property (via a website such as Plotfinder), it’s important to weigh up whether renovating or rebuilding is the right option. The most common reasons for renovating are:

The building has architectural charm, merit or significance
It is impossible to truly reproduce the authenticity of genuinely old buildings and it’s often important to try to keep the building’s fabric, both for exterior character and interior features. Of course, if the home is listed it is protected by law so any works will need prior approval.

Cost advantages
Even if a building is going to be changed radically, keeping the most basic fabric in place can work our cheaper than a complete rebuild with new footings and external walls etc.

Planning approval
It can be a lot easier to get planning permission for alterations to an existing building (often possible under permitted development) than to get permission for a new house. This is not always the case, but will usually be the path of least resistance.

Environmental impact
From a “green” perspective, retaining and reusing things that already exist is generally seen as requiring less energy than demolishing and building from scratch.

Building regulations
While all new work will have to comply with building regulations, with an existing dwelling, there’s no need to upgrade existing non-compliant features of the building as long as the proposed works will not make their non-compliance worse.

What are the most common reasons to knock down your home and rebuild?

On the other hand, there are many instances where renovation means that the compromises you have to make are not only financially costly, but also deplete the worth of the home from a design point of view. Here are popular reasons to rebuild instead:

VAT reclaim
Modifications to an existing building are generally subject to full VAT, while new-build projects are zero rated for VAT, so it often makes financial sense to start again.

Thermal performance
From a “green” perspective, while the process of knocking down and rebuilding might require more energy than retaining and reusing, if the existing building fabric cannot be upgraded effectively, the long-term energy losses of retaining it can outweigh the short-term energy use in a rebuild.

Orientation and plot position
You might feel the home doesn't make full advantage of the plot. Perhaps the current design means living spaces are dark and bedrooms positioned too close to a road. While the exact positioning of a rebuild will still be restricted by planning, you will have far more flexibility to create a layout that works.

Everything is new
Many people will feel much more comfortable with something newly built, knowing that it is entirely sturdy, where the services run and so forth. In addition, anomalies such as over-steep staircases and narrow doorways can be avoided and you won't have to find ways to work around parts of the building that can't be changed such as a load bearing wall that can't be moved, or an impractical drainage system.

How much does it cost to demolish and rebuild?

‘The cost of demolishing whole structures is generally based on their volume – a rough guide price might be around £30 to £40 per cubic metre,’ says chartered surveyor Ian Rock, author of the Haynes Self-Build Manual and director of survey price comparison site, ‘But costs will be skewed by factors such as ease of access, façade retention or work involving asbestos.

‘Money spent on knocking things down can sometimes be reduced by salvaging any valuable architectural materials, such as fire surrounds and slates. You may also be able to recycle rubble as hardcore for new driveways etc. Ready-connected sewers, drains and services can save a small fortune, along with existing driveways, gardens and fencing. You may also be able to utilise the old house as temporary accommodation.’

With the new house, it can make use of some parts of the previous dwelling and still qualify for zero-rate VAT, explains Michael Holmes. These are: a cellar or basement – although it must be demolished to the top of basement/cellar walls; party walls shared with neighbouring properties; and a retained façade required by listing or Conservation Area status. Detached garages or outbuildings can also be retained. 

What’s the process when building a new home?

If demolition followed by construction of a new house is on the agenda, don’t tackle the project in two halves. ‘Combine your applications for demolition and replacement in one, both for planning and building regulations,’ says Ian Rock.

‘Once the old building’s gone, there’s technically no obligation on the planners to grant consent since there’s now nothing to replace. Although in most cases you would get permission, you can’t be certain.

‘Councils normally limit the size of replacement dwellings to a percentage increase over the original building. When it comes to negotiating an uplift in size, it may sometimes be possible to exceed the council’s size policy on the grounds that the existing property could have been bigger had the owner chosen to extend it by utilising permitted development rights.’

If you live in a rural area, the local planning authority is likely to request that an ecological consultant undertake a wildlife survey as part of the pre-application process for the replacement dwelling, explains experienced home renovator Michael Holmes. ‘If evidence of endangered species is detected (typically bats, barn owls, badgers and great crested newts), a further report will be required from a specialist before work can proceed.’

Case studies: Renovate or replace?

A new build near York

‘The eco credentials of our new build reduce the running costs significantly’


Multiple problems meant replacement was the right strategy for the owners of this house near York. The original property had a low floor level, making it prone to dampness; the low-lying landscape produced a flood threat in periods of heavy and prolonged rain; and the roof timbers were undersized. The internal layout of the house was also impractical, with staircases leading to different parts of the first floor; one was narrow and steep, too, which made it hard to get furniture upstairs.

The heating system was inadequate, while the electrics needed replacing. Although the original windows had previously been exchanged for uPVC versions, they were of poor quality and deteriorating, and didn’t provide a means of escape in case of fire. The bathroom and kitchen were also tired.

‘So much money needed to be spent that a replacement dwelling was a far better option,’ explains architect Stephen Samuel, of Samuel Kendall Associates.

The owners wanted a new house as large as planning rules would allow, and so the architect designed a three-storey, seven-bedroom replacement, lifted around a metre out of the ground to minimise the danger of flooding.

With the architects managing the entire project, demolition took place over three weeks, and building the new house took a year. ‘All the principal reception rooms are on the southern side of the house to maximise direct solar gain, and the service rooms on the northern side,’ explains Stephen, of the eco design.

brick house rebuild with red clay tile roof

Using bricks from the old house to reduce the carbon footprint of the new build, along with its passive solar design, makes this a very energy- efficient home

The walls were constructed using brick recycled from the old house, and a ground-source heat pump draws heat from the land, feeding the underfloor heating and hot water. The house has mechanical ventilation, with 95 per cent heat recovery in an airtight design and, externally, heat loss is minimised by the materials used. Rooflights allow light to penetrate the ground floor via the staircase shaft and, together with large windows concentrated on the eastern, southern and western sides of the house, reduce the need for artificial light. The composite windows are energy efficient, and all the doors are double sealed.

‘Because of the eco approach taken, the running costs are less than 20 per cent of those of a similar dwelling without the invested eco credentials,’ says Stephen.

A similar house of this type and specification would cost around £1,020 to £1,240 per square metre.

Replacement for a 1930s bungalow

‘We had a new home in six weeks’


Pete and Sue Sadler’s two-bedroom 1930s bungalow in Surrey simply didn’t have space to accommodate visiting friends and family. At first, the couple contemplated extending to get the space they needed, but came to the decision that demolishing and building a replacement was a better course of action.

‘A new house wasn’t actually cheaper,’ explains Pete. ‘But the costs were sufficiently close, and with a renovation and extension the builders couldn’t guarantee that they wouldn’t find problems, making the cost imprecise.’

The amount of time they’d have to spend away from their home while the work was being done also influenced the couple – renovations might have taken 12 months. However, building a conventionally constructed house would have meant nine to 12 months of renting, too, so they opted for a pre-manufactured house from Hanse Haus, constructed with structural insulated panels (SIPs). ‘Typically, this sort of house would take two months for the groundworks and three for the house itself,’ explains Pete. ‘Ours was actually completed in six weeks.’

Demolition of the old house – for which Pete directly employed the contractors – took four days and the foundations and concrete slab for the replacement were then laid. Next, the new house was delivered, built and watertight in under 48 hours, with the rest of the time taken in fitting it out. In place of a bungalow with a separate living room, kitchen and dining room, Pete and Sue gained a five-bedroom house with the open-plan kitchen/living/dining space they preferred.

hanse haus package home bungalow with pale render

The new build has a spacious, contemporary layout and eco features throughout

The new house is energy efficient with triple-glazed windows, and glass wool insulation, which is made from recycled glass together with materials such as sand. The south-facing roof of the property has two solar panels, as well as underfloor heating – an essential requirement for the couple – which means that they don’t have to work around radiators when positioning the furniture. The house also has a mechanical ventilation system to extract moist air and odours from the kitchen and bathrooms, which helps to keep humidity levels down for a healthier interior.

The new build cost around £230,000 in 2010, in a ready-to-move-into condition, including bathrooms, leaving Pete and Sue to fit out the kitchens and utility room, and add fitted wardrobes.

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