Property value Vs rebuild costs

MouldyOldDough

What is the difference between rebuild costs and property value?
Which is likely to be higher?

daveyjp

Either can be higher as some properties are very very cheap, far less than they would cost to rebuild, but in general value is higher than rebuild cost.

jrawle

For most properties that are fit to live in (not being sold for redevelopment/total refurbishment) the value will be higher as it includes the value of the land the property sits on. When I bought, the valuer quoted the rebuild cost as being 50% of the value of the house.

user1977

jrawle said:

For most properties that are fit to live in (not being sold for redevelopment/total refurbishment) the value will be higher as it includes the value of the land the property sits on. When I bought, the valuer quoted the rebuild cost as being 50% of the value of the house.

Or you could have something like a cheap mid-terrace house, which would be an absolute pain to rebuild (propping up the neighbours, getting access, etc) so the rebuild cost could be higher.

OP, why are you asking?

BlueTeal

Depends on the age and type of property and the area it's in. There are a lot of cheap old terraces in old industrial towns that would cost far more to rebuild than buy. Actually I think even our 50's semi was estimated to cost more to rebuild when we bought it two years ago, but this is a cheap area of the country. If you paid half a million for a standard semi then that's obviously not the case.

ReadingTim

Property value is usually higher, as it's made up of the cost of the building plus the cost of the land that it sits on.  This is why the same type of house in a popular area can cost many times more than it does in an unpopular one.  

movilogo

[PV] property value = market price of that property
[RC] rebuild cost = how much it will take to build the property at same place if it falls apart for whatever reason.

PV takes into account of market condition. 2 ideal properties one in London and another one in Wales likely to have same [RC] but vastly different [PV]. [RC] is relevant for insurance only. 

propertyrental

If the reason for your question is to try to estimate the re-build cost based on the market value.... forget it!

Either get a surveyor to give you a re-build cost, or use the online RICS tool.

https://www.ricsfirms.com/residential/moving-home/finances/how-much-would-cost-rebuild-your-home/

https://calculator.bcis.co.uk/calculator/calculator.aspx

MouldyOldDough

The reason that I asked was a recent home insurance quote mentioned rebuild costs of £280,000 on my property and the actual property value is around £250,000
I just wondered where they got the rebuild cost from
The property has a large garden (bigger than any other house in the road)

user1977

Chances are it doesn't make much of a difference to the insurance premium anyway, given that the vast majority of claims aren't going to involve anything like a rebuild of the property.

DullGreyGuy

MouldyOldDough said:

What is the difference between rebuild costs and property value?
Which is likely to be higher?

Totally independent and either can be higher.

Take two end of terrace houses, 3 bed, 2 bath, 150m2 and both newly refurbished to a very similar standard. Place on in Dundee and one in Knightsbridge. Rebuild costs in London will be a bit higher because trades are bit more, parking costs etc but same ball park. 

Said house in Dundee sales price would be circa £220,000, in Knightsbridge £3.5m