How Do You Create a Budget for a Property Renovation?

Introduction

When embarking on a property renovation, especially a period property, budgeting is critical. Poor planning can lead to unexpected expenses, stress, and delays, but a well-thought-out budget can keep your project on track.

I remember the first time this question, “How do you create a budget for a property renovation?” popped into my head—I was staring at our derelict abbey ruin, and panic took over!

I'll share more about that story in another blog, but for now, let's focus on what's relevant: creating a budget for a property renovation is easier than you might think and it only takes 3 fundamental steps.

In the simplest of terms, the 3 steps to create a budget for a property renovation are:

1. Estimate Costs

2. Seek Professional Advice

3. Include a Contingency Plan

Renovating a period property can be incredibly rewarding.

Not many people are prepared to dedicate themselves to the work required but the courageous ones that do, always say that their lives have been enriched as a result of going through the renovation experience.

They also confirm that thoughtful budgeting and planning played an essential part in their success.

So let's expand the 3 steps to create a budget for a property renovation further:

You will probably need to make yourself a cup of tea or coffee and grab a pen and notepad before reading on...I'll give you a moment...

...Back with your favourite cup of beverage and ready to read on?

Tip: Take your time to go through the expanded checklist below and examine all the aspects relevant to your renovation project.

1. Estimate Costs

When I say 'estimate cost', I don't mean 'guess this casually'. I mean that you will need to create a detailed list, a budget inventory if you like.

How Do You Create a Detailed List for Your Planned Renovations?

To create a detailed list for your planned renovations, you need to consider the renovation categories in order of importance. This helps you understand the full scope of work required and prioritise effectively. Creating a thorough list ensures nothing is overlooked and helps you address the most critical items first.

Start by categorising the renovations into the following order:

• Structural: This category might include foundation repairs, walls, floors, and roofs. It also includes works necessary when altering the floor plan structurally.

• Essential: This category often focuses on safety, like electrical, plumbing, and heating work.

• Necessary Extras: Scaffolding, skip and equipment hire, groundworks, septic tank, professional fees.

• Aesthetic: This category could involve updating the interior design and decoration.

When planning your renovations, prioritising structural repairs and essential updates is key. Safety should always come first. While it's natural to want your property to look beautiful, ensuring it is safe and sound should always be the priority.

Begin by making a list of both aesthetic and essential changes. Focus on fixing any structural issues like foundation cracks or roof leaks before moving on to cosmetic upgrades.

Consider the following example: repairing a damaged roof might not be as exciting as installing new kitchen cabinets, but without a solid roof, your new kitchen could suffer water damage.

After that, evaluate which cosmetic improvements can enhance the property's value without compromising safety.

For instance, while refinishing wooden floors can significantly improve aesthetics, this should only be done after ensuring the subfloor is stable and free of damage.

These essential updates ensure your property is safe and solid, which is crucial for any further work. Long-term, addressing these issues first protects your investment and prevents costlier repairs down the line.

A well-balanced approach ensures that your property not only looks great but is also structurally sound.

Seeking Estimates from Contractors

Obtaining multiple estimates from contractors is crucial to gauge market rates accurately. When seeking estimates, make sure to approach at least three contractors who have experience with period properties.

Evaluating contractors involves looking at their experience, reviews, and previous work on similar projects. Some key questions to ask include:

• Have you worked on period properties before?

• Can you provide references from past clients?

• What is your estimated timeline for the project?

Collecting and comparing estimates helps you find a contractor who offers the best balance of quality and cost.

Phased Renovations as a Budget Strategy

Renovating a property in phases can help manage your budget more effectively. Instead of trying to renovate the entire property all at once, break the project down into smaller, manageable parts. Prioritise areas based on urgency and importance, and allocate your budget accordingly.

For instance, you might find it practical to start with structural repairs and essential updates in the first phase, move to aesthetics in the second phase, and finish off with landscaping and external work in the final phase.

2. Seek Professional Advice

Benefits of Working with an Experienced General Builder or Project Manager

Working with a general builder or project manager specialising in period properties can provide substantial benefits. These professionals bring specialised knowledge and a keen understanding of the unique challenges these properties present. They can offer insights into cost-saving opportunities without compromising on quality, help navigate historical preservation requirements, and provide strategies for effective project management.

For example, an experienced professional might suggest using reclaimed materials that match the original construction, which can save costs and maintain the property’s authenticity.

How to Select the Right General Builder or a Project Manager

Selecting the right general builder or project manager involves a few critical steps. First, look for qualifications and experience relevant to period property renovations (or the type of work that's relevant to your renovation). Recommendations from friends, family, or trusted contractors can also be invaluable. Reviews and testimonials online or from professional trade organisations can give a clearer picture of the professional’s reputation.

When considering a general builder or project manager, ask about their previous work, how they handle unforeseen challenges, and their approach to balancing cost and quality.

Here are some questions to consider:

• Can you show examples of your past work on period properties?

• How do you approach budgeting for unexpected issues?

• What strategies do you use to preserve historical features?

A general builder or project manager who can clearly answer these questions will likely be a good fit for your project.

3. Include a Contingency Fund

Why Unexpected Costs Arise

Unexpected costs are a common part of renovating period properties. They can arise, for example, when structural issues are discovered once work begins or additional expenses related to preserving historical features, crop up! For instance, you might find hidden water damage or need to update old electrical systems to meet modern standards.

(As I'm writing this blog post, I've experienced this unexpected cost myself. A small patch of render repair on our chimney turned out to be a full chimney restoration job, costing hundreds of pounds. Only when erecting the scaffolding have we discovered the full extent of the problem which needed to be addressed).

Understanding these common unexpected costs helps you prepare better and mitigate financial surprises.

How Much Contingency to Allocate in Your Budget

Experts recommend allocating 10-20% in your overall budget for contingencies. This cushion allows for flexibility and prepares you for unforeseen expenses.

Why 10-20%?

Historical renovation projects often uncover issues not visible during the initial inspection.

Setting aside this amount can be the difference between a halted project and one that progresses smoothly.

For example, you might allocate £15,000 as a contingency fund on a £100,000 project, which can cover unexpected repairs or additional costs.

Involving Insurance Companies

Don’t overlook the importance of involving your insurance company in your renovation plans. Period properties often require specialised coverage due to their unique features and risks.

Before beginning any work, inform your insurer about the planned renovations and confirm that your policy covers potential damages during the renovation process. This step can save you from unforeseen financial burdens if anything goes wrong.

For example, if you’re updating the heating system and an unexpected issue leads to flooding, having comprehensive insurance can mitigate the financial hit.

Utilising Grants and Incentives

Researching and utilising available grants and incentives can significantly impact your renovation budget. Many organisations offer financial support for the conservation and renovation of period properties, especially if the property is of historical significance. Apply for these grants to offset some of the renovation costs.

For example, you may find local or national programs offering funds to restore period-specific architectural features or improve energy efficiency.

Documenting Every Expense

Keeping a detailed record of all expenses incurred during the renovation process is crucial. Not only does this practice help you stay on top of your budget, but it also provides a clear financial picture in case you need to review or adjust plans.

Use digital tools or apps designed for budgeting to make tracking easier. Regularly update your expenditure records and compare them with your initial budget estimates to identify any deviations quickly.

Snap a photo of every receipt, invoice, or estimate and upload it to a cloud-based folder labeled accordingly. This ensures you have access to your expense records anytime, anywhere.

Conclusion

In conclusion, successfully creating a budget for a period property renovation involves careful planning, seeking professional advice, and maintaining financial flexibility through a contingency fund. By prioritising essential structural repairs, balancing aesthetics with safety, involving insurance companies, phasing the renovation, utilising grants, documenting expenses, and negotiating effectively, you can navigate the financial complexities of your renovation project.

Remember, the key to a successful renovation is not just in the execution but in accurate financial planning and management. A thoughtfully planned budget not only ensures your project stays on track but also helps you achieve a beautifully restored period property that retains its historical charm and integrity.

I hope that you'll give this budgeting process a go today, but remember to seek professional help and advice when needed.