Can you avoid going over budget on your home renovation?
Henry Holland is halfway through a full house renovation. The designer and ceramicist, together with his husband David, owns a four-bedroom end-of-terrace house in east London. To manage the cost of the work, they’ve divided their plans into two parts: first, bedrooms and bathrooms; second — once the financing is in place — reconfiguring the back of the house.
Their experience so far will be familiar to anyone who has tackled a home renovation, and perhaps useful for those who haven’t. Once the builders were in, questions on aspects that hadn’t been considered and revelations that would have a nasty impact on their budget came in thick and fast. Some were small: where should sockets go, how many and in what material? Others were larger. Tiles removed and carpets pulled up revealed rotten walls, sodden joists and broken boards.
Suddenly both the cost and the time involved rocketed. “Your heart sinks,” says Holland. “While it’s impossible to predict some of these surprises, it does sometimes feel like the builder has you over a barrel once they’ve started the work so it always feels like you’re in a bad negotiating position.”
A survey conducted last year by Houzz UK, a platform established in 2014 that connects homeowners with design and building professionals, showed that the highest 10 per cent of spend on renovations jumped from £128,000 to £200,000 between 2021 and 2023. Marine Sargsyan, its in-house economist, attributes the growth to rising material and labour costs, but is at least some of that avoidable? Half of the renovators surveyed by Houzz in 2022 who had set an initial budget said they’d overshot it, with 12 per cent overspending by 25 per cent to 49 per cent, and 5 per cent going over by more than 50 per cent.
RedBook, a UK agency that oversees high-end residential property projects, has examined figures from 1,750 live projects (including both renovations and new builds) to better understand why renovations typically go over budget and past schedule, and have created a benchmarking tool for professionals called the RedBook Index. New tech platforms are also using data analytics to help those renovating mitigate unpleasant surprises — or at least be better prepared for them — and avoid making common mistakes.
Tackling a renovation today costs considerably more than it did just a few years ago; those embarking upon one should be prepared. The cost of construction materials rose by 38 per cent between September 2019 and September 2024, according to figures from the Department for Business and Trade. (The DBT’s UK Material Price Index shows that the cost of many building materials surged by more than 25 per cent during 2021 alone.) RedBook also cites labour shortages alongside energy price rises and squeezes in material supplies caused by the war in Ukraine.
“Until now, at the top end of the London market, many advisers to buyers have used the yardstick of £1,000 per sq ft for a renovation,” says Tom Adams, chief executive of RedBook. “Once the house is bought and a cost plan is drawn up, many find the project will cost a lot more; some have to back out.”
When it comes to setting a renovation budget, much depends on the specification, and this can get more granular than clients imagine. “In simple terms,” says Adams, “a factory-made brick can cost well under £1, while a specially commissioned handmade brick the same size can cost nearly £5.” Here, Holland sees a disconnect in the system: the difference of perspective between contractor and the owner. “Builders don’t have the same eye for detail as the homeowner.”
Tim Moulding is the eighth generation to run Mouldings, a building company based outside Salisbury, Wiltshire that specialises in country houses. “Certainty of cost relies entirely on certainty of scope and detail,” he says, emphasising that this level of detailed specification needs to be established at the earliest stage. “In high-quality country house restoration, it’s a very complex process of multiple areas of work from repair and restoration of the building fabric to plumbing and electrical services and joinery and decorative finishes. All of these elements present a huge amount of subjectivity.”
Of the projects surveyed by RedBook, well over half took longer than estimated to complete in the 12 months to November 2024. The majority of these were delayed by planning approvals, with a lack of planning staff in local councils cited as the most common problem. David Rees, founder and chief executive of LXA Projects, a project management company, says that in the past 12 months, only 10 per cent of its planning applications were determined within the eight-week statutory time limit that applies to most home renovations.
“The longer a project takes to complete, the more exposed the owner is to fluctuations in build costs,” says Adams. Running over can also mean a building team is compromised and has to split its workforce in order to work on another scheduled project, which further slows things down.
Other complications and cost escalations arise from clients introducing design changes mid-project, says architect George Dawes, co-founder of Somerset-based practice Bindloss Dawes. “The importance of a ‘good’ client is not to be underestimated,” he says. “Clear decision-making is key, based on open communication and trust, and then having the confidence to stick to these decisions as the project unfolds.”
Design changes mid-construction are problematic on many levels. Once bathrooms have been ripped out or a kitchen floor is down to its joists, owners are already locked into the project, so might not get a competitive rate on newly introduced work. The context often becomes adversarial.
Then there is the cost of living in a temporary home, and the upheaval to family life: a 2019 British survey found one in 10 couples considered separating during a renovation, while 7 per cent actually did. “The logistics of managing a project are momentous,” says Holland. “Keeping up with communications between multiple contractors, suppliers and aligning timelines is a job in itself.”
With a detailed project specification, a quantity surveyor (QS) can prepare a feasible cost plan specific to your property, including likely contingency budget requirements, and then they or a project manager can look after the timeline. Yet many mid-market renovators want to avoid the expense; each can charge between 4 per cent and 6 per cent of the overall cost, depending on the project size, according to RedBook.
Technology could be an answer. Mobile software such as Magicplan allows contractors to create accurate 2D and 3D floor plans of a space, enabling owners to visualise the renovated rooms and nail down details such as light fittings, switches and sockets early.
Beams goes further still. The end-to-end service, operating since September 2023, helps owners plan, design and carry out a renovation. Customers are assigned an in-house interior designer who uses software to build renders of each project. The platform uses data from 4,000 renovations to calculate the cost of the project and connects users to vetted contractors. Beams charges fees — averaging around 14 per cent, the company says — for design, procurement and build management services.
The company was set up by Hayden Wood, the former chief executive and co-founder of collapsed energy company Bulb. It was the process of renovating his own home and a commercial premises simultaneously that sparked the idea. “The budget for both was similar but the experience was like chalk and cheese,” says Wood. “For the commercial project, everything was well plotted out, with a timeline, list of work and good visuals. At home, it was a different matter: we had good architects, great builders and a QS put together costs — but it still went 20 per cent over budget and three months over schedule.”
Beams has only completed 30 renovations so far but according to its figures, once a design is completed and the scope of work agreed, by the time of completion the increase in cost for its projects is on average 1.8 per cent, and the build time 2 per cent faster than planned.
For now, Beams only operates within London’s M25 motorway. A project in the capital costs 26 per cent more than in other regions, based on the average price of a renovation of a three-bedroom house, according to BuildPartner, a construction pricing platform.
While renovations may be cheaper to do in the countryside, the challenges to meet budgets and timelines are just as great, says Moulding. Again, it’s all in the details, he emphasises. “Often, after a very lengthy planning and compliance process, clients are all too keen to short-circuit the scope definition and crack on with the building process.”
Reluctance to spend time carrying out the necessary exploratory work and agreeing all the details upfront is where budgets and timescales go awry. Intricate pre-planning might be laborious, but it’ll avoid a drawn-out white-knuckle renovation ride.
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