What a knock-down rebuild actually costs.

Rebuilding on land you already own avoids the single largest one-off cost in a new home — and adds one most people forget to budget for. Here is the whole number, and the test a lender will actually apply.

The stamp duty you never pay.

Buying an established home means paying transfer duty on the whole purchase price. Rebuilding on land you already own means you bought it years ago and paid duty then. On current schedules that is a substantial saving before a single wall comes down:

This is the structural advantage of a knock-down rebuild, and it is why the comparison against buying an established home is closer than build cost alone suggests. It is not a concession or a rebate that you apply for — it is simply a transaction that does not happen. Duty is not charged on the building contract itself in any state.

Demolition is the line people forget.

Part of that saving is spent before you start. Demolishing a standard detached house means an asbestos assessment and removal where it is found, disconnecting services, and taking out the slab and footings — a real cost that a comparison against a house-and-land package never carries.

Site remediation, tree removal under council controls, and somewhere to live for the length of the build sit in the same category: genuine costs of a rebuild that do not appear anywhere in the builder's quote. Budget them separately or they come out of your contingency in month three.

Renovate, or rebuild?

It turns on how much of the existing building is still serviceable. The shell — slab, frame, roof structure, external walls — is around 55% of what a house costs to build and has an 80-year life. Where it is sound, renovating buys back effective age cheaply, because you are keeping the expensive part and replacing the parts that wear out.

Where the shell or the services are at the end of their lives, you are paying to retain most of a building with little left to give. That is the point at which a rebuild stops being the expensive option. The question is never which is cheaper in the abstract — it is how much serviceable life the existing structure still holds.

What a lender needs to see.

A rebuild is a construction loan, not a purchase. The lender values the property as-if-complete, advances progressively against stages, and — the part that changes everything — holds a vacant block as security for part of the term, because the house they are lending against has been demolished.

Serviceability is assessed at your rate plus an assessment buffer rather than the rate you are offered, and debt-to-income is tested against the whole facility rather than the drawn balance. Where the deposit is thin, lenders mortgage insurance is priced on the completed value. Those three tests, not the build cost, are usually what decides the size of the facility.

Cost it on your own block.

Set to a knock-down rebuild, so there is no acquisition duty in the cost base. It prices the build, your state's contributions and the finance, and tests serviceability at rate plus buffer with LMI and DTI — the way a lender will.

Questions this raises.

Do you pay stamp duty on a knock-down rebuild?

Not on the land, if you already own it — you paid transfer duty when you bought it. That is the structural saving against buying an established home: on a $900,000 property it is roughly $34,700 in New South Wales, $49,100 in Victoria and $37,500 in Western Australia. Duty is not charged on the building contract itself in any state.

Is it cheaper to knock down and rebuild or renovate?

It depends on how much serviceable life the existing structure has. The shell is around 55% of a house's build cost with an 80-year life — where it is sound, renovating is the cheaper way to buy back age. Where the shell and services are near the end of their lives, you are paying to keep a building with little left to give, and a rebuild is usually better value.

What does it cost to demolish a house?

It varies with size, access and whether asbestos is present, so it is worth quoting rather than assuming. What matters for a comparison is that it is a genuine cost of a rebuild — along with service disconnection, slab and footing removal, and somewhere to live during construction — that a house-and-land package never carries.

Can I get a loan to knock down and rebuild?

Yes, as a construction loan. The lender values the property as-if-complete and advances progressively against stages. The security is a vacant block for part of the term, which is why these are assessed more carefully than a standard purchase.

How do lenders assess a knock-down rebuild?

Serviceability at your rate plus an assessment buffer rather than the rate offered, debt-to-income against the whole facility rather than the drawn balance, and LMI priced on the completed value where the deposit is thin. Those three tests usually decide the facility size, not the build cost.

Should I demolish or renovate my house?

Work out what proportion of the existing building you would actually retain, and how much life it has left. If the answer is the shell and the services and both are sound, renovate. If either is at the end of its life, you are paying to keep something that will need replacing anyway.

Funding a rebuild?

Siare arranges construction and knock-down rebuild finance across bank and non-bank lenders. If the numbers work, we can tell you what the facility looks like and who would write it.

This page and the calculator are general information only, not financial, tax, legal or credit advice, and not an offer of finance. Stamp duty outcomes depend on your circumstances and your state's rules, and the duty figures shown are modelled from current schedules rather than quoted. Demolition, remediation and build costs are estimates, not quotes. Verify every figure with your own quantity surveyor, accountant and broker before committing to a project.