Is it better to renovate or rebuild? Here are the pros and cons
In the current property market, many homeowners are wondering if it’s better to knock down and rebuild or renovate. We talked to an experienced builder, Gary Dann from MyHomeBuild, for the inside scoop on designs, timeframes, budgets, future value and everything in between.
If your current home is no longer the best fit for your family or lifestyle, and you’ve been mulling over whether to move, renovate, or rebuild completely, you’ve come to the right place. There is one important question you need to ask first though, and we recommend you answer this before you even start entertaining the question, “Is it cheaper to knock down and rebuild or renovate?”
Can you even knock down and rebuild?
You might be leaning towards a rebuild to get your dream home, but first check if you’re actually allowed to demolish your home, and what you might be allowed to rebuild in its place. Your first step is to get familiar with your council’s planning regulations and restrictions for your neighbourhood. Even if you’re leaning towards renovating, checking the development guidelines for your area is still important. For example, if your home is protected by heritage, you’ll probably be limited to renovations (but may be constrained in what you’re able to do – e.g. not changing the front facade or particular interior features.
Getting caught out by council regulations is more common than you might think because unfortunately, development rules can change. In particular, be aware of this if you buy a property with a plan to knock it down and rebuild in the future, perhaps after living in it or renting it out for a few years. This exact thing happened to Tammy Barton, the Founder of MyBudget. She bought a house on a block of land which she planned to knock down and rebuild when she was ready to move, but the year that she decided to go ahead with her plans, the council regulations changed and she was unable to knock the house down (and yes, she did try to fight this, but was unsuccessful).
If you have an existing mortgage on your property, or if you’re applying for a new loan, this may impact your options as well, as you’ll need your lender’s approval to demolish the house (as this can significantly affect the value of the property).
Still have a choice to renovate or rebuild? The next step is to do a value check.
What houses sell for more in your area?
Websites like realestate.com.au and domain.com.au let you browse sold properties in your area. Grab a notebook or make a spreadsheet and jot down the sold price for houses of a similar size (square meterage, number of bedrooms and bathrooms) and make note of whether they were renovated or knock-down rebuilds, and for the sake of comparison, in original condition).
Is rebuilding going to decrease the overall value?
What size and style of home do you hope to build? It’s important to research what different homes are valued at in your area specifically, to make sure you don’t unintentionally decrease the overall value of your property.
As mentioned above, a renovation tends to cost more than a complete knock down rebuild if you’re renovating the entire house.
Is it better to renovate or rebuild? Follow these steps and then decide:
MyBudget offers all our clients the opportunity to get a free property valuation through the MyBudgetLoans lending team, which they find extremely helpful in understanding what their house is worth in the current market in its current state, to help them in their decision making.
Over his 30 years in the building industry, Gary Dann, MyHomeBuild Managing Director, has helped hundreds of South Australian families move into their dream home, and suggests that, “Depending on the location, you’ll possibly get a much better resale value of a brand new home, as opposed to a renovated home,” however people should do as much research into their area as possible, as real estate trends can change fast.
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Are both options still on the cards for you? Okay, now it’s time to start weighing up the pros and cons:
Pros and cons of a knock down and rebuild
- It can be very hard to replicate an on-trend look in a renovated home. When you start from scratch, you can build your dream home, inside and out. Get your perfect floor plan, favourite aesthetic, and everything you’ve imagined in your home (within your budget of course!).
- A modern home isn’t just about the aesthetics (although many would agree that a contemporary style is top of their wish list). A new build typically results in greater energy efficiency and sustainability through the use of modern building materials and design choices, including the home’s orientation.
- New homes need less maintenance, as you won’t have decades of wear and tear to keep on top of, which will save you time and money. New wiring, plumbing, roof and foundations gives you much more peace of mind when it comes to the structural integrity of your home.
- Many older homes are on big blocks and a knock down rebuild lets you take advantage of that land and either subdivide or build a larger home (when planning permits).
- Is it cheaper to knock down and rebuild or renovate? A new build generally comes with a fixed-price contract, meaning you’ll know all your costs upfront, giving you peace of mind. It’s often cheaper per square metre when you rebuild compared to renovating, especially once you factor in all of the unexpected costs that can arise when you renovate that you don’t know until well into the project.
- A knock down rebuild means you only have to deal with one team, and they manage the whole process, rather than you having to play project manager.
- When you knock down your home, you’ll have to find temporary accommodation for generally about a year. This, of course, depends on the design – an experienced builder will be able to give you a better idea of the timeframe. Some people stay with family while they build, others get a rental property. Either way, you’ll have to budget for this additional expense/potentially less-comfortable living circumstances.
- An extension of this is the moving costs, putting furniture and belongings into storage, and moving back in again.
- It can cost around $15,000 to demolish a home (this varies depending on the size of the home, and how much asbestos needs to be removed). There are also additional upfront costs to consider that may not all apply if you were just doing a renovation (depending on the scope), such as design costs, and obtaining all the required approvals and reports – think council, engineering, energy efficiency and building rules consent).
- If your family has lived in the home through significant milestones, it can be surprisingly hard to say goodbye to your old house. Knowing that the home where you first brought your baby home from the hospital or where they took their first steps won’t exist anymore (besides in your memories!).
- Knocking down a home means more waste going to landfill than if you renovate.
Pros and cons of renovating
- Renovating means you can keep your favourite features, and make the current home you love even better. If you’ve lived in your home for a while, there’s probably things you love about it, and that’s why you bought it in the first place!
- If your home is heritage listed, renovation is your pathway to getting more modern features and conveniences. For example, many people just want to update or expand their main living area or create an open plan floor plan – this may only require an extension on the back of the home, if the old home has been well maintained.
- Depending on the scope of the project, renovations can be quicker than a complete rebuild, and it may even be possible to live in the house while you renovate (or for most of it), saving you from paying rent.
- How much do renovations cost? Well, it depends on how major the project is, but as renovations can often be done in stages, you may end up with more time to spread out the costs. If you’re happy with your floor plan and just want to modernise the aesthetics of your home, you could renovate areas of the house in order of your priorities.
- Some buyers have a preference for a well-maintained character home than a modern new build, particularly in some locations (this is where value check research comes into play)
- Depending on the existing structure of your home, you may be limited in what renovations you can do, or you may have to budget for significant renovations – not every home has the foundation to simply add on a second storey or knock out walls to create an open plan.
- It can be very hard to predict what complications you’ll face during a renovation. Plumbing and electrical issues will often not be discovered until the bones of the house are exposed, and you may find yourself (well, your contractors) having to undertake significant work just to make a home safe or up to standards (often leading to a budget and timeframe blow out).
- As mentioned above, a renovation tends to cost more than a complete knock down rebuild if you’re renovating the entire house.
Is it better to renovate or rebuild? Follow these steps and then decide:
- Check the planning and development regulations for your area to see whether you’re able to knock down your home, and what you’re able to do with your land, including subdivision.
- Do a value check: What’s happening in the property market? Do brand new or renovated houses sell for more in your area? If you knock down and rebuild your home will you unintentionally decrease the value of your home?
- Weigh up the pros and cons of both: Many times, while people think they want to renovate (and that it will be a more economical choice), the costs once they’re all added up end up making it cheaper to completely knock down and rebuild.
Gary Dann says that in most circumstances, a knock down rebuild is the best option, explaining, “A knock down and rebuild is generally more cost effective, the design and floor plan will be tailored to your family’s needs, the new home will meet today’s six-star energy efficiency rating saving you money in the long run, and there’ll also be less ongoing costs in a new home.”
Getting expert advice is always a great place to start. MyHomeBuild offers free consultations for knock down rebuilds, and can walk you through what the process involves and what you need to consider.
Need help budgeting for your dream home? Join MyBudget for caring, expert support in reaching your financial goals, including getting financing to build a new home. Talk to our team today for more information.
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