For property developers, where to build can be as important as the building itself, regardless of whether it’s a commercial or residential project. Multiple factors go into making the perfect development in the perfect location. From proximity to schools, shops, transport links and nature for residential developments, to footfall and ease of access for both customers and suppliers.
However, building in different locations can come with vastly different construction costs, potentially eating into any extra profit the prime location would have generated. So where’s the sweet spot? Well, we can’t tell you that… but in this blog post, we’re going to explore how much it costs to build a house in London compared to elsewhere in the South East such as Sussex or Surrey.
What are the variable costs associated with building a house?
There are several costs that come with building a house, or any property for that matter, that can be highly dependent on the location. Often, property development projects in cities and other prime locations will have to factor in higher costs such as:
The cost of land
Land prices in London are much higher than in Sussex, Surrey or other surrounding areas and this can be a major factor influencing the overall budget of the project.
Labour & material costs
Architects, tradespeople, labourers and other contractors tend to command higher wages in London due to the higher cost of living. Although material costs are unlikely to change significantly across the South East, the logistical challenge of getting them into London may lead to higher overall expenditure.
Building regulations
Different local authorities often have different building regulations and requirements. It’s not to say that building in London will have more regulation, as building in a National Park or AONB can be equally as restrictive. However, London can have stricter building regulations compared to other urban and suburban areas in the South East, and that can add to the complexity and cost of the project.
With that in mind, let’s explore just how much more expensive it can be in London for a building project.
The Costs of Property Development in London
Undeniably, London is an expensive place to develop property. In fact, building costs in London are the second highest in the world and continue to rise. You should expect for housebuilding costs in the UK to start at around £1750 per square metre, and they could easily rise to over £3000 per square metre. It is hard to put a figure on how expensive it may be to develop a property as there are multiple factors which can impact the overall cost. These include:
- Site investigation, demolition, site clearance, new utilities.
- Substructure, foundations, drains, insulation and floor slab.
- Superstructure, external walls, internal walls, roof structure, insulation and air-tightness.
- External finishes, roof tiles, doors and windows, and wall cladding and gutters.
- Services and fit-out, plumbing, heating, ventilation, electrics, doors, and stairs.
- Decorations, plastering, finishes, flooring, tiling and sanitary and lighting.
- Patios, paths, driveway, planting and landscaping.
- Site management, welfare, health and safety, scaffolding and fencing.
However, as an estimate, you could expect the following amounts for building a home in London and the South East in 2024.
- 2 Bedrooms: £190,000 – £280,000
- 3 Bedrooms: £240,000 – £365,000
- 4 Bedrooms: £300,000 – £440,000
- 5 bedrooms: £320,000 – £480,000
If you’re planning your perfect property development in the South East and need to understand your financing options, don’t hesitate to contact Hunter Finance. We’ve funded countless successful development projects across the region and are always eager to work with new and old clients alike.
