27/08/2026
REBUILD COST V MARKET VALUE
Know the difference
REBUILD VALUE (Buildings Insurance Value)
This is the estimated cost to rebuild the property from scratch if it were destroyed.
It includes:
• Demolition and site clearance
• Labour and building materials
• Professional fees (architects, surveyors, planning)
• Reconstructing the building to a similar standard
It does not include the value of the land.
Example:
• House market value: £450,000
• Land value: £250,000
• Cost to rebuild house: £180,000
The rebuild value may be around £180,000, even though the property is worth £450,000 on the open market.
MARKET VALUE
This is the price the property could reasonably sell for in the current market.
It is influenced by:
• Location
• Size and condition
• Local demand
• School catchment areas
• Transport links
• Land value
Example: A small house in central London might have:
• Market value: £900,000
• Rebuild value: £250,000
The market value is much higher because the land and location are valuable.
WHY THE DIFFERENCE MATTERS
• Buildings insurance should usually be based on the rebuild value, not the market value.
• Buying, selling, mortgages, probate, and taxation generally use the market value.