Rebuild cost too high in lender's valuation survey?

pinkteapot

We're buying for £470k (valuation survey agrees with this price), but the surveyor for the lender has said that the rebuild cost of the house is £440k.

This seems bonkers to us, for two reasons:

1. It suggests the land is only worth £30k. We're moving very near to where we currently live. Our current house is worth £250k with a rebuild cost of approx £170k, suggesting that the land is worth £80k. The plot at the new house is bigger, so should in theory be worth more.

2. Our current house and the new house were both built in 1990. The new one is bigger (about twice the square footage), but I don't think the rebuild cost would be 2.5 times as much. They're both typical late 80s / early 90s estate houses.

The only reason I'm querying this is that a condition of our mortgage offer is that we have buildings insurance for the rebuild cost they've given (£440k). I know that a lot of insurance companies just give you a very high or unlimited sum insured for buildings, but with our current insurer you do have to state a value and it does affect the premium. Obviously I would never risk under-insuring, but equally I'm not keen on paying for more buildings insurance than we need for the life of our 28 year mortgage...

Has anyone ever queried the rebuild cost given in a valuation survey and had any joy getting it changed?

I found a RICS rebuild calculator online but it's next to useless. It estimated the rebuild cost of our new house as £275k, but said 'with a range of £154k to £428k depending on the quality'(!).

dgtazzman

The rebuild cost is always higher than the actual market value of the house as it also takes into consideration other factors, such as demolition costs of the property, clearing rubble etc. Just think of it like this, if you have a fire that completely burns out the inside of the house, they'd have to knock it down, clear the site and start building from scratch...

wannahouse

well be thankful you're not paying £250,000 for a house with a rebuild cost of £825,000! :0

Trentenders

dgtazzman wrote: »

The rebuild cost is always higher than the actual market value of the house...

Don't be daft.

Kynthia

dgtazzman wrote: »

The rebuild cost is always higher than the actual market value of the house

Not according to the valuation I had last week. Purchase price £300k, rebuild cost of £165k.

dgtazzman

'Always' might not fly, I admit, but remember your valuation also includes the value of the land the house is built on etc., I'm just talking pure the building on the land. I'm guessing flats could/would also be a different story.

SandC

I was always under the impression that rebuild costs were far lower than the market value of a house. The land doesn't come into it because if the house gets totalled in a tornado (for example) you still own the land, you just have to rebuild the house.

pinkteapot

SandC wrote: »

I was always under the impression that rebuild costs were far lower than the market value of a house. The land doesn't come into it because if the house gets totalled in a tornado (for example) you still own the land, you just have to rebuild the house.

That's what I thought too!

Broker hasn't got anywhere changing Santander's mind, so we're going to switch to a house insurer who gives you a large buildings sum insured by default. Insurance would be too pricey through our current insurer for that rebuild cost.

Wh05apk

SandC wrote: »

I was always under the impression that rebuild costs were far lower than the market value of a house. The land doesn't come into it because if the house gets totalled in a tornado (for example) you still own the land, you just have to rebuild the house.

It depends where in the country you are, in London a small house might have a rebuild cost of say £150k, but value could easily be £3-400k, other parts of the country the rebuild cost could be similar, but the valuation could only be £100k