Building reinstatement costs up 3.8% over year

The average cost to reinstate a damaged home or flat has climbed by 3.8% over the past year, according to new data from the Building Cost Information Service (BCIS).

The figures – based on January prices and released in July of 2025 as part of the service’s yearly update to its residential rebuild cost models – aggregate cost assessments across 1,135 residential models as well as 650 auxiliary features such as garages and outbuildings.

While the core dataset is indexed to January, the service explained that a further 2.2% increase in reinstatement costs had been seen in the first half of the year, meaning that “pre‑existing underinsurance is likely to be further exacerbated, potentially leaving policyholders exposed in the event of a claim”.

Reinstatement price increases were predominantly driven by rises in the cost of labour, though the effect of materials cost inflation remains prevalent, as does the cost of handling “traditional materials and craftsmanship, as well as distinctive architectural features”.

Sustained increases

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.

“Inflation has cooled considerably in recent years. Annual growth in the house rebuilding cost index (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.”