While ‘location location location’ is the enduring adage when it comes to buying a property, sometimes the building that is in that location does not meet your criteria for a home. That shouldn’t put you off though, because unless that building has had a preservation order slapped onto it, you do have a number of options as to what you can do with the space.
Which brings us to the question – should you completely demolish the existing building that is on the perfect site, or should you work with what you have?
Here’s a break down of the questions you should be asking yourself should you find yourself fin the fortunate situation of having found your perfect location, but not quite so perfect building.
1. Is the current property stand alone, or is it detached to another property?
This question is not as clear cut as it might seem. Common sense would indicate that a terraced property, for example, couldn’t be demolished. However, in built up areas like London, demolition projects can be a highly targeted and precise process that takes into account surrounding buildings. A better question would be, is there anything about the existing building that is fundamental to the space it is occupying, or could it be improved upon. If the latter is true, then chances are you would be better off demolishing.
2. Double- triple-check the local planning regulations
If you are wanting to replace an existing building, chances are you are looking to significantly increase the footprint size.
3. Does it make financial sense?
Often when you buy a plot of land with a rackety old house on it, the price you pay is calculated on the potential of the site, rather than the house itself. The cost of demolition will vary according to the size of the building, but is likely to be around the £10-15,000 mark. Take into account rebuild costs, is your mortgage company going to be happy? The average cost of building a brand new house varies greatly, depending on materials that you use, quality of finish. Working to industry standard averages, a four bedroom home will cost about £350,000, though you could get away with spending as little as £200,000. Don’t forget, this is in addition to the cost of the land that you have agreed to purchase.
How does this stack up against the costs of refurbishing what is already there? Will it give you a property that is in line with similar properties in the area?
4. Check on the VAT benefits
You need to confirm the latest regulations with your accountant but as it stands you can reclaim VAT back on materials used to build a new property, and any labour you use is zero rated. With VAT rates currently at 20 per cent, this will save you a good proportion of your budget, which can then be used on better quality materials, or an upgraded kitchen.
While weighing up the pros and cons, it is imperative that you consult with as many specialised professionals as possible. Local planning experts, architects, builders and estate agents – who will all give you opinions based on current market trends, legal implications, financial implications, ways in which you can save money, avoiding potential hidden pitfalls.
But keep focus on your ultimate goal. This could be the biggest investment you have ever made, and may just be your forever home. Whether you demolish or renovate, you are creating a something that will be your legacy for generations to come.