Contents
The Default Case for Renovation
In London, the vast majority of residential work is renovation and extension rather than new build. This is because:
- London's residential land is almost entirely already developed
- Planning policy in most London boroughs strongly protects existing housing stock
- Victorian and Edwardian terraced houses are well-suited to extension, conversion, and upgrading
- The existing structure provides a significant proportion of the final asset value — demolishing it destroys embodied value
For the typical London homeowner — extending a terrace, converting a loft, refurbishing a flat — renovation is not a choice to consider alongside new build. It is simply the only viable option.
When New Build Becomes Relevant
New build in a London residential context typically arises in specific situations:
Demolish and rebuild: Where an existing building is structurally deficient, too small to extend meaningfully, or has such poor layout that renovation cannot achieve the desired result. This requires planning permission for demolition and the replacement dwelling.
Backland development: Building on large rear gardens or infill plots. Requires planning permission. Policy support varies significantly by borough.
Garage or outbuilding replacement: Replacing a detached garage or outbuilding with a residential unit. Often requires planning and is subject to specific policies.
Self-build on a plot: Purchasing a vacant plot or a plot with a derelict structure and building a new home. Rare in inner London, more possible in outer boroughs and the suburbs.
Commercial-to-residential conversion: Converting a commercial or industrial building to residential use under permitted development (prior approval) or full planning permission. A different type of project but often considered alongside new build and renovation.
Cost Comparison
Renovation costs: A full renovation of a London terrace (electrics, plumbing, insulation, new kitchen and bathrooms, decoration) typically costs £60,000–£150,000 depending on scale and specification.
An extension and loft conversion combined adds £100,000–£180,000 on top.
Total transformation: £150,000–£300,000+ for a comprehensive renovation and extension of a three-bedroom London terrace.
New build costs: New build residential construction in London costs £2,500–£4,000 per m2 depending on specification and location. A 150m2 new house costs £375,000–£600,000 to build — excluding land, planning, professional fees (15–20% of build cost), finance, and contingency.
For a three-bedroom house at 100m2, expect £250,000–£400,000 in build costs alone, plus £50,000–£100,000 in fees and extras.
The VAT difference: New build construction is zero-rated for VAT. Renovation and extension work is typically 20% VAT (or 5% for certain conversion and renovation works). This can represent a significant cost difference for large projects. However, the new build saving on VAT rarely outweighs the land and demolition cost difference in London.
Planning Comparison
Renovation: Most renovation works fall within permitted development or are supported by planning policy. Planning applications for extensions and loft conversions are lower risk and less costly than new build applications.
New build: Any new dwelling requires planning permission. In conservation areas, Article 4 areas, and most inner-London boroughs, planning for new build residential is complex, often controversial, and may require pre-application discussions, heritage impact assessments, and significant design iteration. Success is not guaranteed.
Design quality matters enormously for new build planning applications in London.
Quality of Outcome
Renovation: You are constrained by the existing structure — storey heights, wall positions, floor levels. Creative design can achieve excellent results within these constraints, but you cannot always achieve the floor plan you want without significant cost.
New build: Complete freedom of layout, structure, specification, and design. You can achieve the exact ceiling heights, room sizes, structural spans, and energy performance you want from first principles. The result, if well-designed, typically feels more coherent than even the best renovation.
Speed
Renovation: A comprehensive renovation and extension of a London terrace takes 16–36 weeks depending on scope. Some works are possible with the family in residence.
New build: Demolition, new build construction, and fit-out of a comparable property takes 12–24 months. The site is uninhabitable throughout.
Sustainability
Renovation: Retaining an existing building avoids the embodied carbon of demolition and new construction. The carbon cost of manufacturing and transporting new building materials is significant. From a sustainability perspective, renovation is almost always preferable to demolition and rebuild unless the existing building is beyond economic repair.
New build: A new build can achieve dramatically better operational energy performance (lower running costs, better airtightness, better insulation) than even a heavily upgraded Victorian terrace. Over a 30–40 year horizon, the better operational performance may offset the higher embodied carbon of construction.
Decision Framework
Consider new build (demolish and rebuild) when:
- The existing structure is genuinely beyond economic repair
- The existing layout and structure cannot deliver what you need
- Planning permission for demolition and rebuilding is achievable
- The site and programme can accommodate a 12–24 month void period
- The project scale justifies the higher cost and complexity
Consider renovation when:
- The existing structure is sound
- The current layout and size can be improved to meet your needs
- You want to preserve the character of the existing building
- Planning risk is a concern
- Speed and lower disruption matter
- The budget does not extend to new build costs plus land/site costs
For most London homeowners, the answer is renovation. The question then becomes: how can we design and build the renovation to achieve the best possible result from the existing structure?
rcbGroup specialises in A-to-Z renovation, extension, and design-and-build projects across London — helping homeowners get the most from their existing property without the complexity and cost of new build.
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Important Note
This guide is for general information only. Building regulations, planning rules, and legal requirements change regularly and vary by local authority. Always seek professional advice specific to your project and location. To talk through your own project, book a project review.
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