As a landlord, it’s important that you know the estimated rebuild cost of your rental property.

Read on to find out how rebuild costs work, how to work out the rebuild value of your property, and why you’ll need this information when taking out buildings insurance.

What is the rebuild cost of a property?

Also known as buildings sum insured, the rebuild cost of a property is the amount of money needed to rebuild a property from scratch.

A property may need to be rebuilt if it was completely destroyed by a fire, flood, or storm.

Rebuild values are likely to be lower than the property’s current market value, or even what you paid for it (if you bought it fairly recently).

The two key things you’ll need to consider when working out the rebuild costs of your rental property are the cost of labour and materials.

How much would it cost to rebuild my house?

The rebuild value of a property is likely to be a lot less than its market value. This is because the rebuild cost doesn’t take things like the desirability of the property’s location and the value of the land it’s built on into account.

For example if you bought a property in 2012 for £350,000 that is worth £425,000 on the current market, the rebuild cost is likely to be less than £300,000.

The average estimated property rebuild cost in the UK in 2021 was £211,000, according to research by MoneySuperMarket. This is compared to an average market value of £290,000.

The average rebuild cost and market value varies across UK regions, as this table shows:

Region	Average rebuild cost	Average market value	Difference
London	£255,000	£555,000	£295,000
South East	£236,000	£400,000	£164,000
East	£216,000	£365,000	£149,000
South West	£213,000	£320,000	£107,000
West Midlands	£205,000	£250,000	£45,000
Northern Ireland	£134,000	£170,000	£36,000
East Midlands	£214,000	£245,500	£31,500
Scotland	£187,000	£200,000	£13,000
North West	£199,000	£210,000	£11,000
Yorkshire & the Humber	£199,000	£200,000	£2,000
North East	£184,000	£180,000	-£4,000
Wales	£209,000	£200,000	-£9,000

It’s important to note that these figures are likely to be higher in 2023.

You can use the following sources to get an idea of the rebuild value of your rental property:

existing buildings insurance policy documents
property deeds
survey report
mortgage valuation report

Bear in mind that the figures you get from these sources could be out of date, particularly if you’ve had work done and also when you consider the rising costs of labour and materials.

That’s why it’s important to have an up to date estimate of your property’s rebuild value when remortgaging or renewing your buildings insurance.

How to do a rebuild cost assessment for your property

To get an estimate of your property’s current rebuild cost, there are two options you can take.

Using a rebuild cost calculator

This is the cheaper option, but requires more work on your part. To get an accurate estimate from a rebuild calculator, you’ll need to know details such as:

when the property was built
overall size of the property in square metres or feet
property type and number of rooms

The Building Cost Information Service (BCIS) rebuild cost calculator is one of the best-known and widely used. It’s free but you’ll need to register to access it.

Using a surveyor

The other, more hands-off approach is to hire a building surveyor to calculate the rebuild cost of your property.

This is more expensive than using a house rebuilding cost calculator but it’s recommended for owners of listed properties or homes with unusual materials such as thatched roofs.

When would the rebuild cost of my property change?

Your property’s rebuild cost could rise or fall as labour and material costs change over time.

For example, research by the UK Trade and Business Commission found that the cost of construction materials including cement, timber, and steel increased by 60 per cent between 2015 and 2022. During the same period, the cost of labour in the UK increased by 30 per cent.

These increased costs are due to a combination of factors, including Brexit and supply chain issues caused by the pandemic.

On top of this, the cost to rebuild your property from scratch could also increase if you make changes such as an extension or loft conversion.

Keeping up to date with the latest labour and material costs, while also taking rebuild costs into account when renovating your property, will make life easier when it comes to renewing insurance or getting a new buy-to-let mortgage.

Why you need to know rebuild costs for insurance

As mentioned above, it’s highly likely you’ll be asked for your property’s rebuild cost when taking out buildings insurance.

This is because the insurer needs to know how much it would cost them in the event that you made a claim to rebuild your property if it was destroyed by a fire, flood, or storm.

It’s important to make sure that you’ve taken the time to get an up to date rebuild valuation of your property when taking out landlord insurance.

If you underestimate the rebuilding costs, you could lose thousands of pounds as the insurer will only pay out up to the amount you provided when taking out your policy.

Meanwhile if you overestimate how much it would cost to rebuild your property from scratch, you’ll be paying a higher insurance premium unnecessarily.

Do you have any unanswered questions about rental property rebuild costs? Let us know in the comments below.

Useful guides for buy-to-let landlords

Get set with tailored landlord cover

Over 200,000 UK landlord policies, a 9/10 customer rating and claims handled by an award-winning team. Looking to switch or start a new policy? Run a quick landlord insurance quote today.

Start your quote

Landlord rebuild cost calculator: what do you need to know?