If you are thinking of renovating your house, have you considered the option of demolishing and building a new house from scratch? On a cost per square metre basis, it is more expensive to renovate an existing house than it is to build a new one, so the option of demolishing and rebuilding can be a cost-effective solution.
But there are many factors to be considered and every project is unique. You need to ascertain how solid the existing structure is and how extensive are your planned changes. If you have a good structure and the changes are minor, tearing down would probably not be worth the expense. However, if you intend to make big changes then there can be benefits in building from new.
In the past, the rule of thumb was that the land and building were of equal value. If an owner did not have substantial equity in the property, it was difficult to get bank approval to demolish and rebuild. However, now the value of the land far exceeds the value of the building, making the option of demolishing and rebuilding more attractive.
Will your local council allow the house to be demolished? Often in inner-city areas, particularly with terrace houses, the existing house will be considered part of a streetscape of historical value. In these cases, approval to demolish the entire house will probably not be granted. Except where the house itself is deemed to be of historical significance, it is usually acceptable to retain the front of the house and to demolish and rebuild the rear.
Demolishing and rebuilding can allow for developing the site with a higher density. It has been quite common recently for home owners in first-ring suburbs such as Richmond, South Yarra and Prahran to demolish their houses and to build two or more townhouses on the site. Though more expensive to construct, the sale price of one or all of the townhouses can potentially make it worthwhile financially. The same is true of second-ring suburbs with typically larger blocks.
A major advantage of renovating or rebuilding is being able to improve the energy efficiency of a house. Escalating costs of water and energy in the future will turn well-designed sustainable homes into money savers for their owners.
In the near future, the mandatory disclosure of energy rating performance will be introduced for all houses for sale or lease. This will make well-designed sustainable homes even more valuable.
Typically, it is far more eco-friendly to renovate an existing house than it is to demolish and rebuild, especially with regard to waste generation. However, the devil is in the detail when it comes to establishing what is green. If you have decided on building new, then there can be substantial green benefits and ways to reduce the environmental impact.
Building new should give you a better opportunity to design a house that takes full advantage of orientation and passive energy-saving design as well as incorporating state-of-the-art energy systems and sustainable, and where possible, locally sourced materials.
The demolition can be done in a way where many of the materials can be salvaged and reused in the new house or sold on for reuse elsewhere, thereby reducing the waste generated.
The constraints of renovating and extending an existing house can make it difficult to achieve the house that you really want, and it may be the case that building from scratch allows you to achieve most or all of your desired outcomes. It would be worthwhile to at least investigate with your architect the feasibility of this option.