Rebuild cost MORE than valuation?

Eviesmummy

I've just had my valuation survey details through the post. The cost of rebuilding is £120k but the mortgage valuation is just £115k. Isn't the rebuild cost usually lower than then the valuation? It's a nice 3 bed semi with a good level of decoration, no structural flaws, nor does it need renovation of any kind. Have we just bagged more of a bargain than we realised or is this pretty normal?

comeandgo

Well it would depend, the rebuild cost is if property half destroyed and all rubble etc has to be taken away then a complete rebuild. As we have quite a bit of land our rebuild cost is a lot less than purchase price but if we had no garden then our rebuild price would be high compared with a purchase price.

kyana

i got a quote online recently and it suggested rebuild cost would be 50% more than our purchase cost, seems mad but i don't want to under-insure (3 bed mid terrace)
strange things.

pinkteapot

Our valuation was £470k and the rebuild cost £440k which seemed far too high to us (I even queried it on here). I'm sure we're now paying far too much for home insurance, as we have to insure for that amount.

When we bought our previous house, a few years ago, the rebuild cost was only a bit over half the valuation!

Maybe building costs have gone up in the last few years?

Eviesmummy

Thanks all, we know that the house was attractively priced for a quick sale and because it belongs to family - several very similar properties near by have gone up for sale in the last couple of weeks for between 10 and 15k more, so maybe its a combination of a good deal and increasing building costs.

vectistim

A very rough ball park building cost might be £100/sq ft. 3 bed semi - maybe 900 sq ft. So rebuild cost £90,000 + some money clearing the site of the rubble from the existing structure having collapsed and you're not that far out.

I guess you're somewhere northern, where residential building land is evidently not worth very much. The exact same building but with an entitlement to a Pimlico passport would have the same rebuild cost[1] but a much higher market value.

[1] In reality the rebuild cost would be higher due to London costs.

agrinnall

Interesting thread. I've just sold my house, and the rebuild cost in the Home Report was 10% more than the valuation, but looking back at the survey when I bought 10 years ago it was 5% less than the valuation. I wonder what it would have been when valuations were at their peak in that 10 years?

Eviesmummy

We're in south Wales, but yes I'm sure that would apply just as much here Vectistim.

dominoman

That is strange. I guess the price to rebuild cost ratio indicates the area.

In SE London the house we were previously buying had a rebuild value of only 210k for a purchase price of 550k, which surprised us. But I guess as you get more central the value of the house reflects the location and cost of the land more than anything else.

kingstreet

Use the ABI calculator, if you want confirmation;-

http://abi.bcis.co.uk/

If you think the "sum insured" route is costing you too much, try quotes for bedroom-rated cover where the premium is based on number of bedrooms rather than the sum insured.

If you do, make sure you get "trace & access" cover included. It's one of the largest causes of claims and without it, the cost of finding a leak is down to you!

Trace and Access covers:

The cost of removing and replacing any part of your home to locate the source of any water escaping from tanks, pipes, appliances, or the fixed heating system of the building
The cost of repairing any burst pipes.