Key Takeaways
- Always include a 10 to 15% contingency on top of the build cost, and 20% in a pre-1919 London property that has never been opened up.
- Budget for professional fees (design, structural, surveys) at 10 to 20% of build cost.
- Remember VAT at 20%, building control at £980 to £1,410 on an extension or loft, and party wall surveyors at £900 to £2,700 per adjoining owner who dissents.
- Once VAT, fees, statutory charges and contingency are added, the real commitment is roughly 45 to 70% above the headline build cost.
- Hidden issues in older London homes are the main reason budgets blow, and a detailed, itemised quote is the main defence.
A renovation that stays on budget starts with a budget that is realistic. The figure on the builder's quote is only part of the true cost, and on a London project the rest of it is not small. Here is how to build a budget properly, what the contingency is actually for, and the surprises that catch London homeowners out.
Start with the build cost
Get a detailed, itemised quote from your contractor that breaks down labour and materials by element. This is the most reliable basis for the build cost and it is the only way to compare contractors like with like. Vague round-number quotes are where budgets unravel, because the cheapest of three is usually the one with the least in it rather than the one offering better value.
For a sense check before the quotes arrive, mid-range whole-house work in London runs at £1,500 to £2,200 per m², putting a typical London home at £130,000 to £200,000, against £1,200 to £1,800 per m² nationally. A cosmetic refresh at £800 to £1,200 per m² is a different job entirely, with services untouched. See full house renovation costs in London.
What does the full budget actually add up to?
Roughly 45 to 70% more than the build cost where the quote excludes VAT, and 25 to 40% more where VAT is already inside it. The worked example below takes a £150,000 build cost, which is about right for a 95 m² London terrace taken back to brick at mid-range specification.
| Line | Typical amount | On a £150,000 build cost |
|---|---|---|
| Build cost, from an itemised quote | £1,500 to £2,200 per m², mid-range London | £150,000 |
| Professional fees | 10 to 20% of build cost | £15,000 to £30,000 |
| VAT at 20% | Standard rated on most work to an existing home | £33,000 to £36,000 |
| Householder planning application | £548 from 1 April 2026, where one is needed | £548 |
| Building control | £980 to £1,410 extension or loft, £361 to £721 a single opening | £1,200 |
| Party wall surveyor | £900 to £2,700 per adjoining owner who dissents | £0 to £5,400 |
| Skips, scaffold licences and parking suspensions | Set by each borough, charged weekly | £3,000 to £6,000 |
| Contingency | 10 to 15%, 20% pre-1919 | £15,000 to £30,000 |
| Temporary accommodation and storage | 3 to 6 months if you move out | Varies by area and duration |
| Realistic total commitment | 45 to 70% above build cost | £218,000 to £253,000 |
Then add the extras people forget
- Professional fees: design, structural engineering and surveys, 10 to 20% of build cost, at the higher end where a steel beam is involved. Architecture for London puts them at 15 to 20%.
- VAT: most work to an existing home is standard-rated at 20%, so confirm whether quotes include it. On £150,000 that is £30,000, which is not a rounding error. The reduced 5% rate can apply where a property has been empty for two years or more before work starts.
- Building control and planning fees, which are separate charges on separate timetables. See Building Regulations explained.
- Party wall surveyor fees if neighbours dissent, at £900 to £2,700 for a single agreed surveyor and £1,800 to £5,400 where each side appoints its own. A mid-terrace project has two adjoining owners, so the figures can double.
- Skips, scaffold and parking suspensions. Scaffold for a three-bed runs £800 to £1,600, plus a borough licence where it stands on the pavement and a bay suspension charged per bay per day in most inner London boroughs.
- Provisional sums. If the tile allowance is £4,000 and you specify £12,000 of tiles, you pay the difference. Check every provisional sum in the quote against what you actually intend to buy.
- Temporary accommodation and storage for 3 to 6 months if you cannot stay. This is the largest single forgotten cost on a whole-house project. See living in your home during a renovation.
How much contingency should you actually set aside?
Between 10 and 15% of build cost as standard, rising to 20% where the property is pre-1919 and has never been opened up, and higher again where the ground or a neighbouring structure is involved. The contingency is insurance, not spare spending, and it is held back rather than allocated.
| Project | Contingency | Why |
|---|---|---|
| Kitchen or bathroom in a sound post-2000 house | 5 to 10% | Little hidden behind the finishes, services are known |
| Whole-house renovation, post-war property | 10 to 15% | The standard allowance |
| Pre-1919 terrace never opened up | 20% | Lath and plaster, lime mortar, perished wiring, rotten joist ends |
| Structural work, underpinning or a basement | 20% or more | Ground conditions and neighbouring foundations are unknowable until you dig |
| Listed building or conservation area | 20% or more | Consent conditions can change the specification part way through |
What does the contingency actually get spent on?
Specific, identifiable things, all of which appear in the first fortnight when the floors come up and the walls come off. These are the six we meet most often in London houses, with what each typically costs.
- A rewire that was meant to be partial. Perished rubber or cloth-sheathed cable means the whole house, at £7,000 to £9,000 in a three-bedroom London property, plus £1,000 to £3,000 of making good after the chasing. See house rewire costs and signs you need to rewire.
- Replaster instead of skim. Blown lath and plaster has to come off, which turns a £400 to £900 room into an £800 to £1,800 one, and adds a skip. See replastering costs.
- Damp and timber. Rot in the joist ends where they bear into a damp external wall is routine in a Victorian terrace and is not visible until the boards are up. See damp causes and fixes.
- An extra steel. A wall assumed to be a stud partition turns out to be carrying, which adds £2,500 to £6,500 for the beam, the engineer and building control.
- Drainage that is not where the drawing says. Discovering a run under a proposed foundation changes both the programme and the cost.
- Regularising someone else's work. Unauthorised alterations by a previous owner are charged at the standard building control fee plus 50%, and may have to be opened up or rebuilt first.
Keeping control once work has started
The budget-killers are scope creep, late decisions and hidden issues, and only the third is outside your control. Decide promptly, resist adding work mid-project unless you adjust the budget in writing at the same time, and choose a contractor who flags issues early with a clear cost rather than at the end with a total.
Three habits do most of the work. Tie payments to completed stages rather than dates, and hold a 5% retention until snagging is cleared. Price every variation in writing before it is carried out, so nothing arrives as a surprise on the final invoice. And keep the contingency in a separate account, because a contingency you can see in the current account gets spent on the kitchen.
See also renovation mistakes to avoid, how to choose a builder in London and planning a renovation. For an itemised quote you can rely on across a whole-house renovation in London, contact us or call 07472 424 226.