Rebuild cost models update shows uplift in reinstatement costs

BCIS has published its annual update to the residential rebuild cost models used extensively across the insurance industry. Based on January 2025 prices, the latest revision shows an average uplift of 3.8% in rebuild costs for houses and flats compared with the previous year.

Now totalling 1,135 residential models, the BCIS dataset supports reliable reinstatement cost assessments by insurers, surveyors and loss adjusters. A further 650 ancillary models cover features such as garages, outbuildings and external works, to ensure assessments reflect the full reinstatement picture.

Cos Kamasho, insurance data manager at BCIS, said: ‘An average increase of 3.8% in reinstatement costs in the year to January 2025 represents a sustained increase on the previous year.

‘We continue to see significant variation across cost elements; some areas have stabilised, while plumbing related elements like hot and cold water installations have seen average increases of over 6%.

‘Elements with a higher component of timber, such as upper floors, went up by just over 1%, while prices for timber windows were stagnant with a very slight decrease of 0.1%. There is also variation between similar elements, with lower-end kitchens, for example, increasing in price by over 7.5%, while mid-range kitchens on average went up by 2.2%.’

The 2025 update includes 81 new models, focusing on coverage for interwar flats. These reflect traditional materials and craftsmanship, as well as distinctive architectural features such as chimneys, bay windows, ornate door and window detailing, and non-standard ceiling heights.

While the models are updated annually to a fixed January pricing base, costs are adjusted between updates using the ABI/BCIS House Rebuilding Cost Index (HRCI).

Calculated monthly and representing the UK average across property types, the HRCI ensures assessments reflect recent cost movement. The latest HRCI data shows a further 2.2% increase in reinstatement costs since January, underlining the importance of working with current data.

Together, the 3.8% average uplift in the models and the additional increase captured by the HRCI mean that any pre‑existing underinsurance is likely to be further exacerbated, potentially leaving policyholders exposed in the event of a claim.

Kamasho said: ‘Inflation has cooled considerably in recent years – annual growth in the HRCI peaked at over 19% at the end of 2022 – but that doesn’t necessarily mean prices have come down. The cost of many construction materials remains at historic highs, so using up-to-date data is vital.

‘Currently, the more significant driver of construction costs is labour. Earnings in the sector have outpaced the wider economy, and recent increases to employers’ National Insurance Contributions and the National Living Wage are compounding this pressure. Add to that the widely reported skills shortages in the industry, and it’s clear that reinstatement costs remain on an upward trajectory.’

In addition to changes to input costs, such as materials, plant and labour, BCIS rebuild models are also updated to reflect new legislation and regulatory requirements.

Kamasho said: ‘Our models are grounded in real-world construction costs sourced from bills of quantities, specialist rates and the BCIS Schedule of Rates, which contains thousands of estimating build-ups for construction activities with labour, plant and materials prices.

‘They also reflect the cost of demolishing and rebuilding in line with current Building Regulations and statutory requirements. Recent changes have included the uplift in costs associated with Part L energy efficiency regulations, which came into force in 2023, and the models will be adjusted again to align with the Future Homes Standard, due to be announced later this year.’

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