Rebuild costs calculator
What are rebuild costs?
The rebuild cost of your property is the amount it would cost to rebuild the property if it were destroyed. These costs include materials, labour and fees for professionals, such as architects and surveyors.
The Building Cost Information Service (BCIS), which is part of the Royal Institution of Chartered Surveyors (RICS), defines rebuild costs as: "the costs of demolishing and clearing away the existing structure and rebuilding it to its existing design in modern materials, using modern techniques, to a standard equal to the existing property and in accordance with current Building Regulations and other statutory requirements."
Rebuild costs are not the same as your property's market value or your council tax band's valuation. The market value is usually higher than the rebuild cost because it includes the land your property sits on but this isn't always correct and each risk needs to be calculated based on its own specific circumstances. Land accounts for roughly one-third of a property's market value. Rebuild costs don't include the value of the land because when a building is destroyed, the land is usually unaffected.
Why do you need to know the rebuild cost?
When you take out Landlord Buildings Insurance, your provider needs to know how much your property should be insured for in case it's destroyed and you need to make a claim. The rebuild cost directly affects the amount of insurance premium you need to pay.
What happens if you under or overestimate the rebuild cost of your property?
As the property owner, it's your responsibility to get the rebuild cost figure right. If it's calculated too low, you may be underinsured. This means if your property needs to be rebuilt, you'll have to make up any shortfall between the amount the insurance company pays out and the total rebuild cost. If it's calculated too high, you could be paying too much for your landlord insurance.
How are rebuild costs calculated?
There are a few different ways to calculate your rebuild costs. You could use a rebuild cost calculator, like the BCIS calculator. This gives you an estimated range based on the information you provide.
When you take out a Landlord Insurance quote with us, you have access to the BCIS calculator to obtain a rebuild estimate. There are limitations to the BCIS calculator as it isn't available for all risks, for example you can't obtain an estimated rebuild cost for flats.
An alternative, and more reliable method, is to appoint a professional chartered surveyor to give you a rebuild cost estimate. You can find a surveyor near you on the RCIS website.
What factors might affect your rebuild costs?
The size of your property and the number of bedrooms will affect the rebuild cost, but that's not all.
If your property is built from non-standard materials, it's likely to be more complicated (and expensive) to rebuild. For example, if the walls are made from concrete rather than brick or it has a thatched roof instead of tiles.
Your rebuild costs may also increase if your property is situated in an awkward location, making it difficult to access and get materials to site.
Another thing to consider is whether your property is a listed building. If it is, the rebuild costs will usually be higher. The region in which your property is located makes a difference too. It costs about 38 per cent more to rebuild an average house in London compared to Leeds.
If your property isn't built from brick or stone, or if it is historic or listed, you won't be able to use the BCIS rebuild calculator. The BCIS calculator also doesn't apply to:
- Houses with more than three or four storeys (depending on age) or with basements.
- Flats in a block which is more than four storeys high or where the block includes communal areas beyond stairs and corridors.
- Houses or flats with special design features.
- Houses or flats that aren't of average quality (although guidance is given on the possible range).
- Houses or flats that are much larger than the average UK home. This also includes single properties that have since been converted into flats.
- Houses containing hazardous materials, e.g. asbestos, likely to require special precaution/treatment following damage or demolition.
Why you should review your rebuild costs regularly
You should review your rebuild costs on a regular basis to ensure you always have the right level of insurance cover. This is particularly important if you make any changes to the property, such as building an extension or adding a conservatory, as it could increase the rebuild costs.
Some insurers use 'index linking'. This means, at each annual renewal, your insurer will update the building sum insured according to an index, then alter your insurance premium in line with this. This helps protect you against underinsurance.
The indexes used are linked to inflation and calculated using a number of other factors too. In 2020, the BCIS stated its forecasts would need to be reviewed following the COVID-19 outbreak, and the knock-on effect it was having on the construction industry.
Although index linking will keep the insured sums up to date against inflation rises, the initial rebuild costs must be correct from the outset if you want to be certain that you have enough insurance cover. The BCIS also recommends your rebuild costs are reviewed at least every five years, rather than just relying on index linking over long periods.
It's worth checking with your insurer to see if they use index linking. If they don't, you might not have sufficient insurance to cover increasing rebuild costs.
By reviewing your rebuild costs on a regular basis, you can make sure you've always got the right level of cover.