Planning your development How to budget

Make sure that you can afford a property development

When improving a home, start planning your budget from the beginning, if you need to borrow more money, you don’t want to take out too much or too little, as this may cost you more in the long run.

In some cases, particularly for old or unique properties, it's difficult to know the final cost until the job is finished. Problems may occur that were impossible to predict when starting the job, so you need a high level of contingency in your budget.

For example, when excavating for an extension, an old pipe might be found that needs to be taken out, or the electrics that seemed easy to add to existing wiring might not then work so further expense is required.

Creating your budget

It's helpful to have a guide of everything you need to think about when creating your budget. Setting up a spreadsheet can save time by showing what impact any changes or new quotes will have on your overall budget. 

There are two ways to create your budget. The first is room by room and the second is to create a budget per job, such as adding a conservatory or a loft extension, building a garage, painting or electrics.

Planning a contingency sum

How much you put aside as a contingency sum will depend on the size and type of property. Older properties can attract more unexpected costs, so save an extra 30% on top of your basic budget just in case. On other properties, larger jobs might require 20% more than your budget and smaller properties could result in you spending between 10 and 15 per cent more.                

Items for your budget

Our planner lists the key costs you might need to consider. These lists are not exhaustive, however, and other items should be put under the ‘Other’ heading.