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 2026 prices, the latest revision shows rebuild costs for houses and flats increased by an average of 4.9% compared with the previous year, up from the 3.8% increase recorded between 2024 and 2025.

Now totalling 1,210 residential models, the BCIS dataset supports robust reinstatement cost assessments by insurers, surveyors and loss adjusters. A further 650 ancillary models cover features such as garages, outbuildings and external works, ensuring assessments reflect the full reinstatement picture.

Cos Kamasho, principal consultant at BCIS, said: ‘An average increase of 4.9% in reinstatement costs in the year to January 2026 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 sanitary fittings, hot and cold water installations have seen average increases of over 6%.

‘Elements with a higher component of timber, such as roofs, upper floors and stairs, went up by just over 5%, while foundations had the least increase of just over 1.6%. There is also variation between similar elements, with softwood windows , for example, increasing in price by over 7.0%, uPVC windows up by 5.5%, while aluminium windows on average went up by 1.5%.’

The 2026 update includes 81 new models, focusing on coverage for prewar flats. These reflect traditional materials and craftsmanship, as well as distinctive architectural features such as chimneys, bay windows, ornate door and window detailing, decorative ceiling plaster and high floor to 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 reinstatement costs have increased by a further 3.7% since January, underlining the importance of working with current data.

Together, the 4.9% 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.

‘In recent years the more significant driver of construction costs has been labour, with recent increases to employers’ National Insurance Contributions and the National Living Wage, compounding this pressure. Add to that the widely reported skills shortages in the industry, which are likely being masked at the moment by lower demand levels, and it’s clear that labour costs remain on an upward trajectory.

‘Over the last few months, however, materials costs have seen more significant inflation due to the effects of conflict in the Middle East. Disruptions to global supply saw Brent crude, an international benchmark of oil prices, stayed around the $100 per barrel for weeks after hostilities broke out between the US, Israel and Iran. Although prices eased following the ceasefire agreed in June, resumed conflict has since pushed oil prices up again. This is particularly important for energy-intensive materials, and for reinstatement work, which typically requires plant and machinery for demolition and site clearance, driving up project fuel costs.’

In addition to changes to input costs, 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 which comes into effect next year.’

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