Secret to Budgeting Your House Extension Cost Correctly

The question everyone always (quite rightly) asks… How much will my house extension cost?

The answer… It depends..!

I realise that is not what you want to hear, but there are just far too many variables in play for anyone to be able to give you a definitive answer at this stage.

So lets dig deeper into this topic

Within this article I will provide you with some essential information and advice for you to use so that you can budget your house extension cost, from an early stage, to make sure you have everything budgeted and there are no nasty surprises along the way.

Let’s get started…

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House Extension Cost Assumption

Let us start with setting out our assumptions clearly and for us to understand what the basis of this article is written on.

Firstly, we are assuming that your project is a house extension, i.e. you will be adding something to the house which will ultimately increase the size and envelope of your house.

We are assuming that you are at the planning stage of the project, with no plans created, designs started and no permissions applied for.

The last assumption is that you are doing this project for your own home to live in, and this is not a project or development you are completing to make a profit. I.e. this is not for a property development business or to supplement your income.

The final point is important, as there are distinct differences between renovating your home for you, and renovating a home to make money, but that is another topic for anther day…

Let’s move on and start budgeting you house extension cost…

What and Who Needs to be Budgeted for..?

At this early stage of planning and budgeting for a project, we need to list out everything which we may need to spend money on.

Obvious..? Yes..!

But a lot of people get this stage wrong, and end up having to spend a lot more money than they first thought. So lets start your project with a good and clear budget.

This is also critical at this stage should you be budgeting for a loan to pay for the house extension costs as you need to know how much money is needed.

The simple question of what needs to be budgeted for you house extension cost should be broken down into several categories:

  1. Design Team
  2. Surveys
  3. Permissions and Legal Requirements
  4. Construction Costs
  5. Fixtures and Fittings
  6. Contingency

This list can be quite long, but there are a lot of potential costs involved, and different areas where costs appear.

Now lets look at each section, and add some more meat to the bone. As a note, I will not be giving you any definitive costs to each section, as the cost will vary greatly from project to project. What we are doing here is generating a full and complete list of all the potential cost items which you need to consider and budget for your for your house extension cost.

What we are doing here is generating a full and complete list of all the potential cost items which you need to consider and budget for your for your home extension cost.

Mike Johansson

1. Design Team:

In simple terms, your design team is anyone involved in the project who will input into the design of your house extension, before and during the construction works. Depending on the complexity of the project, this can involve anywhere from 2 to 10 people..!

In my beginners home renovation guide, I listed out a number of the potential people involved in the design team and these are as follows:

  1. Architect – a person who plans, designs, and reviews the construction of buildings.
  2. Interior Designer – a person who is responsible for the interior decoration of a room or building.
  3. Structural Engineer – a person who designs the structural element of a building.
  4. M&E Engineer – a person who designs the mechanical, electrical and sometime plumbing aspect of a building.
  5. Quantity Surveyor (QS) – a person who estimates the materials required for a project and the cost.
  6. Project Manager – the persons in charge of the planning and execution of the project.
  7. Planning Consultant – person responsible for securing and advising on the planning application process

Let’s take a breather…

I do not expect you at this stage to know who out of the list above you need to appoint and manage. Your first step is to approach an architect and/or builder to discuss the project. There is no need to go out and speak to everyone listed above..! Which is good news.

When you speak to your architect or builder, they will recommend what input they need from the design team to complete the designs for your project and to complete the construction works.

They will also be able to recommend designers they have worked with before, which is a great, as you will not need to go out and find these guys.

Once you have an idea of who is needed for the project, you can allocate a cost line to them in the budget for your house extension cost.

You will also need to consider how you will be contracting with the builder. Will you be doing a ‘Design & Build’ contract or something more traditional. In the case of a design and build, the builder will take all responsibility for the designs and you have one point of contact, which has its advantages.

To wrap up… think about your design team, work out who you need and most importantly… give each designer a budget allocation.

2. Surveys:

Surveys is an area which many people forget, but can cost a few thousand pounds if needed.

Depending on the size of your project, there maybe a need for some specialist surveys to be completed to help the design team with their tasks.

This can range from a number of different surveys, such as structural, damp, asbestos and drainage surveys.

All will be very much specific to your project and your lead designer (usually the architect or builder) will advise you on which surveys are needed.

Remember… add each requirement to your budget and allocate a cost.

If you don’t know which surveys are needed and you haven’t yet approached an architect or builder… why not just allocate a fixed figure for all surveys? Put in a work in progress budget which you will update as you get more information.

3. Permissions and Legal Requirements:

Above in the first paragraph, we made the assumption that you house extension cost would be based on an extension which increases the size of the building and thereby creating more space in your home.

Whether or not you need planning permission will be determined by the size of the extension, however, lets assume you do need planning permission.

(If you need some further information about whether you need planning permission, the planning portal is an excellent resource)

Lets also assume that your extension will be going up to the boundary of your neighbours property. This will mean a party wall agreement will be required.

With this in mind, the main three ares which should be budgeted for are:

  1. Planning Application Costs
  2. Building Control Costs
  3. Party Wall Awards

These costs will need to be factored into your budget, as they can run into the thousands.

4. Construction costs:

Now to the meat of the house extension cost. The construction…

Obviously, this is the money which you will be paying to the builders for them to complete the construction phase of your house extension.

This will be the biggest cost within your budget and it is essential that you do some research and allocate a proper and estimated budget for this.

Below, I will provide some methods in which you can get good quality estimates and the good news is that it is not difficult. You just need a bit of time to complete it properly.

Sounds good..?

It does indeed… Lets go through 4 ways in which you can correctly budget you house extension construction cost:

Quote from builders:

The first step to get a good estimate of your construction cost is to go to a builder and ask them to quote for the project.

You can you use my 11 easy ways to find a good builder and draw up a shortlist of builders to approach.

Make contact with them, explain your project and invite them round to visit your home. Once they are there, you can go through all the detail of the project and ask them to come back to you with a quote for the works.

Simple…

You should ideally do this with at least 2 builders so that you get a range of prices and you have some quotes to compare to.

However, a few words of warning… do be careful to check what is included and excluded from their quote. As they are not tendering the project based on a set of plans and a full schedule of works, there will be a lot of areas which they would have made assumptions about.

Also be careful with items such as VAT. Is their quote + VAT?

At this early stage, we are setting a budget and finding out what your project will cost, roughly. So the quality of the quotes received should be enough to give you an indication of what you should be budgeting.

Once you decide to go forward with the project, there is no reason for you to use the builders who have quoted, and you may choose to appoint a builder using a different method.

An easy way to get some construction costs to help you budget your house extension cost.

Next…

Speak to your Architect

Architects work very closely will builders and at any one time, will have several projects in the construction phase.

They will know from experience and from talking to you about your project, the approximate costs to complete the house extension, within a range.

So…

What is the process..?

Initially, do some research on architects who work in your area and make contact with them over the phone. Explain a bit about your project and then set a date for them to come round and visit your home.

Show them round, discuss the project and end the meeting by asking them to provide you with a fee proposal for the architectural role in the project, and make sure you ask for them to set out an indicative budget for the project.

An architect will be more than happy to provide budget estimates as they would be keen to work throughout the whole project as architect and project manager, but they should also have lots of experience with similar projects.

An example: I’ve recently finished construction on a pair of houses which involved a side extension, rear extension, loft extension and full refurbishment.

A big project..! (But remember I do this for a living)

I invited architects to pitch for the work and the range of budgets they recommend I use for the project was between £275k and £475k (plus fees, VAT and contingency on top).

I’ve included below, a snippet from one of the letters received from an architect, which set out his thoughts on the cost estimate for the project.

House extension costs architect

This particular architect used one of the properties as an example, my actual project involved two houses, but its interesting to see how they thought the cost would be estimated.

Having tendered the work and now completed the project, the final construction figure was agreed was £630k (+VAT), or £315k per property.

The estimate provided was pretty accurate, but they did provide quite a broad range.

So get out there and speak to your or several architects to get as much ‘free’ information as possible.

The third option…

Speak to a Professional and Spend Some Money:

Not always popular, but the third way to set your budget is to spend some money upfront and pay a professional to review the project for you.

Whether this is a Quantity Surveyor, Builder, Building Surveyor or Project Manager, it doesn’t really matter. The point is that you are paying someone for their expert advice and recommendations for your project.

This approach would be more suited to larger and more complicated projects, especially when there are more design team members involved.

An advantage of spending the money up front is that you will get much more information than just an indicative budget. You will get information about a potential programme, timescales, permissions required and many more things that you may not have thought of.

Of course, it comes at a price..!

Finally…

Estimating the Cost Per Square Meter:

The final method of budgeting your house extension construction cost is simply to apply a cost per square meter assumption.

Obviously, for this, you need to know approximately the size of your new extension.

You will have seen in the architects fee proposal snippet I provided above, that they assume a rate of £1,500/sq.m to £2,000/sq.m as an assumption.

Lets assume in your project, you are adding a single storey rear extension which will add 20 square meters to your home. Using the rate from the architect, you would then need to budget between £30,000 and £40,000 (plus VAT) for your project.

Of course…

That is a pretty size able difference between either figure, and I would suggest that you would want to be a bit more certain on your cost.

If you google this topic, you will see that there are many places that suggest an estimate of £1,000 or £1,500 per square meter is a sensible estimate. I would be careful with this advice, as each project is so specific to its circumstances.

In summary, of course you can use a £/sq.m assumption, but my advice is that you already have 3 excellent methods above which can get a more tailored cost estimate for your project.

5. Fixtures and Fittings:

An area you shouldn’t forget about, is all your fixtures and fittings.

This will include things like kitchens, sanitary ware and flooring, but should also include all your soft furnishings which you plan to put in the new space. If you are buying new furniture, then this needs to be budgeted for and included within your house extension cost.

A point to make here, is to be very clear with the builder as to what is included and more importantly excluded from their quote.

For example…

Does their quote include supply and fit of a new kitchen, or does it only include fitting (or none..!).

Does the quote include for a kitchen worktop? Sink? Taps? Lights? etc etc…

You get the point…

6. Contingency:

The final cost area which must be included is a contingency amount.

A contingency is basically a pot of money which has been allocated to cover unforeseen items and areas where enough budget was not allocated.

The contingency is essential and do not be tempted to remove this area to save costs at this early planning stage.

I always have a healthy contingency for all my projects, and I would suggest a figure of 10% of all the above costs to be included.

So… total up all your costs which you’ve budgeted for, using the above sections and then apply 10% to the total. This is your contingency.

Do not touch it until you have to..!

Final Thoughts:

Creating and planning a project at the early stages can, in some instances, make or break a project. One of the key areas which always causes some issues are the house extension cost and budgets.

Ensuring a good and well thought out budget is created at the beginning of the project, will ensure that you remain in complete control of the financial side of things. This is an area which can escalate very quickly, and when money is involved, this can lead to a disastrous situation.

You will have seen from the advice and ideas I’ve set out in the article, that setting a budget for your house extension costs, is actually… quite simple…

Yes… that’s correct..!

Like a lot things in life, if you sit down and carefully go through the budget and steps needed to be taken, it will benefit the project immensely and ultimately, keep it simple.

There is no need for your costs to spiral out of control, or for you to have any unwanted surprises… so use my guide above to make sure you have a solid budget from the very start.

All the best,

Mike – Your Property Pro

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