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Dear foolishlearner...my saga continues so happy to share all the fun stuff I have learnt recently...BCIS provides ( to RICS members and others) a range of rebuild costs for your borough..your property will then be assessed on where it falls within the quality of housing range. The BCIS provides monthly inflation updates. Demolition costs and professional fees are included in the BCIS data, VAT is exempt, as you are insuring for the hypothetical vaporisation of your property to zero...BCIS allows 14..5% of their assessment to be professional fees and demolition costs inc VAT. Basement and attic floors are calculated at 70% of assessed cost per m2.
If the footprint or enhancements of your property haven't changed, there is little reason to pay for a survey every 3 years...bizarrely RICS recommends this...could be because keeps their members busy?
and for hefonthefjords, given we had agreed the premium back in January which would run to MARCH 2022, being asked to accept this new price by RICS equivalents of YOPS in June stinks of cynical ex LMX trader trying to pull a fast one...perfect timing for excessive building inflation when COVID brakes are being lifted. FYI, our rebuild cost from desktop Charlie is £6800/m2..obv desktop is all metric. Funny thing desktop Charlie obv thinks I can't use internet ...will let you all know if/when I win!
Cost per square foot for construction is way up now due to very high materials costs.
Contractors are quoting based on £150-200/sq. ft. at the moment. That's why your rebuild price went up.
Were i used to work (quasi government/charity) we had arguments with insurers over claims, generally for partial damage as total loss for there accommodation buildings was rare. The insurers would only pay a percentage of any claim relative to the ratio between the employers estimated cost via their own estimates. The employer then made an agreement with their insurers. the insurers agreeing to cover all cost generally arising so long as the building was initially insured for 1.2 x the build contract cost and associated fees. The build contracts varied from £1m to £10m with fees around the 15% mark Each year rebuild cost move with inflation
They may have paid marginally over the odds but considered the certainty of a full pay out was the better option
As to my own house insurance they give me a guide line based on, house type, materials built, number of beds and post code. Its usually reasonable if you consider a full rebuild is rarely required, but there are demolition and access cost plus possible temporary accommodation cost
make no mistake the share price performance is definitely not an overwhelming endorsement of ab
many thanks..
I should say that the desktop valuers have various accreditations plus staff with AssocRICS...RICS watering down whatever good name they had by handing out semi-professional accreditations
Katenip - try Hamilton Fraser as broker
Wouldn't you be better off getting it properly calculated by a Chartered Surveyor? I'd be a bit wary of doing it myself on a large / commercial building. At least if the Surveyor gets it wrong you have their PI insurance to go after! Surveyors fees will hopefully still be covered by the saving on your premium, going by what you've said!
to give you some context...with rebuild cost quote from desktop pranets, and using cost modelling.com plus location multiplier , I could build a theatre seating 500+ or a swimming pool over 50 meters. There would be change from building a petrol station, planetarium or railway station.
I've sacrificed hours of my life to establish BCIS has a £m2 base for rebuild costs ...you then use a location index as a multiplier to fine tune and then there is a range that you choose from regarding your building and the surrounding buildings in your borough(London) or area. The BCIS rebuild cost includes professional fees and demolition costs and is ex-VAT (this is because you are insuring for the hypothetical complete destruction of your building so it would be a new build cost thus ex-VAT) I have also established that unless I become a chartered surveyor in the next week I cannot get the base number out of BICS so have been trying friendly surveyors for this simple number. So far I have been given a figure some 2.5 times lower than the quote I have been given. obv getting a second opinion. As I only wrested control of the management a couple of years back, this would suggest we have been overpaying massively for at least 10 years...this is not a surprise.
BTW : new insurance broker through current managing agents, used to be LME trader (supposedly) rest of CV opaque.
Baffled. An RICS surveyor would never calculate value at risk based on market value. The BCIS rebuild calculator is used for basic calculations which uses real construction costs as a basis. For more complex buildings, elemental cost estimates are carried out by a Quantity Surveyor, again using real world rates. At the lower end of the market the rebuild cost can be greater than the market value (which raises an interesting question about the land value). I'll informed "Homes under the hammer" landlords can fall foul of this. Eg, by adding purchase price (say £30k) and adding capital investment (eg £10k) and then only insuring for £40k which would be woefully inadequate if it came to rebuilding.
Katenip. You should be thanking whoever has recalculated the rebuild cost. Much better to have to pay a higher premium now, than find out you're under insured when the worst case happens. Perhaps as a director you could even be liable? Remember it is the responsibility of the property owner / freeholder, not Insurer, to ensure their buildings are insured for the correct amount (including reassessing regularly). I work in the industry and often come across claims being repudiated, or payouts reduced due to under insurance. This is nearly always on commercial or landlord claims, rather than domestic claims. Where brokers are involved, I'd certainly be questioning the quality of their service if they didn't advise recalculation of value at risk.
The RICS is perhaps not the bastion of professionalism you imagine. I have received awful advice from surveyors. Some don't know the law and fudge it. Re house rebuild prices; there is a systematic problem of over estimation in the UK because homeowners wrongly conflate market value with rebuild cost i.e. ignore the land value. The basic rule of thumb is to multiply the square footage by the cost per square foot, generally 60-100 GBP depending on location, age, and type of property. However, materials costs are rising rapidly which may also be reflected in labour rates shortly. Watch this space.
katenip.
I'm sure you know already but the Guru on rebuilding costs is the RICS and responsible insurance companies generally use them as a yardstick. IMHO a better bet than some junior oik in an insurance company.
Treating loyal clients like dirt comes to an end at the end of this year I think when insurance companies will be prevented from such riuses as the one you quote.
GL
as responsible director for the block where I live, I have been less than thrilled this evening to receive a revaluation of "rebuilding cost" ( ie: when buildings experience a meltdown) 71% up from last year. If all insurers , or more likely insurance brokers( commish merchants) are encouraging revaluation of buildings for rebuilding costs by desktop Annie/Charlie , guess how well the insurers are going to do going forward.
share price will hold based on future earnings and divi. a capital return will cause a temporary blip but value investors will soon return. 500mil cost reduction per annum will be favorable to the bottom line and therefore future dividend payouts
Added @ 422p
It’s a long hold with excellent divs.
Will add if & when any retrace in share price.
ATB
45p div and 8 pound a share in 3 years! Now that would certainly set my trouble off!
Its the suggested 45p dividend that I am more excited about :)
Who would want that- it’s usually taken away with a consolidation. Just nice divi and gentle climb paying off some debt-.
Would be very happy with that prediction. :)
Sky news just reported that cervian expect the share price to be £8 within the next 3 years.