Replacing an existing house

To many the idea of replacing an existing house with a new one looks like an expensive option, but this is not necessarily the case.

In many cases the site used by an existing house will be larger than most present day plots and permitted development rules may mean that you can get planning consent for a substantially larger property than currently exits on the site. 

A common option considered by many self builders is a bungalow site where a substantial house can be built. In some cases two or more modern houses can be fitted into the larger plot that exists.

Lots look at the expenses issue.

You need to demolish the existing property, but in most cases far more than the cost is recovered from architectural salvage, not only fittings, but bricks, slates and more may be salable.

Services like electricity, gas, telephones, water, and both types of drainage in most cases will  already exist on site, saving a considerable cost. 

Access, gates, fencing or walls and more will already exist.

If the old property has a basement that is not to be incorporated or the foundations run along the same routes, then you may have slightly more costs in creating foundations that you are happy with, but this should not be either a major problem or cost, where the lines of the old and new foundations just cross this is not normally a problem and in other cases just having slightly deeper foundations may overcome the problem.

The value of a plot is the value of the completed home that can be put on it, less the cost of building the home, less any other costs and less the profit a developer wants or saving self builder wants. The value of the current property is the value that the existing property sitting on the site will sell for. 

To compare the value of an exiting house with the plot it sits on, you can create a similar formula. The table below is a simplified version of the table from a work book looking at this topic, and although incomplete is useful in looking at initial options and understanding the financial principles involved.

If the result is positive you have a viable opportunity, if negative not so.

While this is too simplistic for a final decision to be made it does allow you to see where it might be a financially sensible option to consider.

The location and plot size may make a considerable difference. Take for example a country site that has a bungalow in the center of a large plot. If this site is large enough to get three executive houses on and you can get planning permission for this, then a little experimentation with the figures will allow you to see what the potential may be. In some of these cases it is possible to end up with a free house, the two other plots sold off covering the cost of acquisition and building your home.

Estate agents rarely look at property from a full development perspective, planning does not exist and they are looking at selling what they are asked to. So it comes down to who can spot the opportunities.

Another situation can be the reverse of this, two small properties or a house and workshop, or existing unused commercial property, block of garages or some other situation similar, where demolition of what is currently there may open up a larger site that would allow one or more properties to be created. One factor that is sometimes overlooked is that the current arrangements of boundaries are not fixed, so you can combine and re-split, rearrange access, take away or add, only limited by  your skill, financial sense and what the planners will allow. While a single self builder may be limited in some cases, the group or club has no such problems and very little should be ruled out without some investigation.

Besides the straight financial case, there may be other factors to consider such as the location and view, larger plot size, and locality. In some country areas it is now near impossible to get permission to put up new builds on green field sites, but redeveloping existing sites is in most areas allowed.

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