Mortgage Glossary: Buildings Insurance - rebuilding cost

Buildings Insurance - rebuilding cost

It is common sense to take out "building insurance" when you purchase a property. In any event, if you're taking out a mortgage, your lender will insist on it. You will need to know the rebuilding cost of your property so that you may insure for the correct amount.

You may make your own estimate by finding out the external floor area of your home - both upstairs and downstairs, and then multiplying this number by the estimated building cost per square foot or square metre. The average cost to rebuild a 1,400 square foot home in the UK is currently around £208,000, up from £197,000 in 2019. This puts rebuilding costs at around £148 per square foot.

The sum insured under a buildings policy must be the full rebuilding cost of the home. Do remember that the market value of your home or the Council Tax band valuation actually has no direct relationship to the rebuilding cost.

You may instruct a member of the Royal Institution of Chartered Surveyors (RICS) to prepare a professional Rebuilding Cost Assessment for insurance purposes.

RICS has a Residential Rebuild Cost Data Service for property professionals. This offers residential building cost data that is based on up-to-date building regulations.

Members of the public can also use a free rebuilding cost calculator from RICS's Building Cost Information Service.

Get professional help from a qualified independent mortgage advisor and see how much you could save on your mortgage payments. There's no obligation, just plain good advice.

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