The short answer
Converting an existing, usable cellar is often cheaper than building an extension, but digging out a new basement is usually more expensive. A straightforward cellar conversion, where the space and headroom already exist, can cost around £1,000–£2,000 per square metre, which can undercut a rear extension at roughly £2,000–£3,000+ per square metre. The picture flips once excavation is needed: lowering a cellar floor or digging a new basement runs to £3,000–£5,000+ per square metre, well above an extension. So the honest answer is, it depends entirely on whether you are converting space that already exists or creating new space underground. A dry cellar with good headroom is the case where converting genuinely beats extending on cost.
Whether a cellar conversion beats an extension on cost hinges on one thing: how much excavation it needs. The sections below compare the scenarios and show when each option is the more economical way to add space.
At a glance
- Existing cellar conversion~£1,000–£2,000/m²
- Rear extension~£2,000–£3,000+/m²
- Cellar with floor lowering~£2,000–£3,500/m²
- New basement dig-out~£3,000–£5,000+/m²
- Cellar wins whenHeadroom already exists
When the cellar is cheaper
A cellar conversion costs least when most of the structure is already there. If the cellar has sound walls, adequate ceiling height and a reasonably dry environment, the work is largely waterproofing, insulation, services and fit-out, with no excavation or underpinning. That keeps the cost toward £1,000–£2,000 per square metre, often below the cost of a comparable rear extension, while reusing space the house already encloses.
This is the scenario where converting genuinely beats extending: you gain a room without building new structure, losing garden or undertaking major groundworks. Period houses with original cellars are the classic example, offering a head start that an extension cannot match. Where this applies, the cellar conversion is usually the most economical way to add usable floor area.
When the extension is cheaper
The cost advantage disappears once the cellar needs to be created or deepened. Lowering an existing cellar floor to gain headroom means underpinning the walls and excavating, pushing costs to roughly £2,000–£3,500 per square metre. Digging a new basement beneath a house with no cellar is the most expensive route, commonly £3,000–£5,000+ per square metre, because it involves sequential underpinning, excavation, structural concrete, waterproofing, party-wall agreements and a long programme.
In these cases a rear extension at around £2,000–£3,000 per square metre is usually the cheaper way to add the same floor area, with fewer structural risks and better natural light. The table below summarises where each option sits.
| Option | Indicative cost/m² | Cheaper than extension? |
|---|---|---|
| Existing dry cellar conversion | £1,000–£2,000 | Usually yes |
| Cellar with floor lowering | £2,000–£3,500 | Roughly comparable |
| New basement dig-out | £3,000–£5,000+ | Usually no |
| Rear extension (benchmark) | £2,000–£3,000+ | — |
Indicative UK figures for guidance. Costs vary with access, ground conditions and finish.
Other costs to weigh
Cost is not only about the rate per square metre. A cellar conversion keeps the garden, which has its own value, whereas an extension consumes outdoor space that some homes can ill afford to lose. The cellar route also avoids reshaping the footprint of the house, which can matter in conservation areas or where neighbours are close. On the other hand, an extension delivers easy natural light and garden access, while a cellar conversion may need a lightwell to feel like a proper room, adding cost.
There are also risk and value considerations. Basements carry waterproofing and structural risk that a single-storey extension largely avoids, and that risk should be priced in. Both add habitable floor area, so the value uplift tracks local prices in either case; the cheaper route to the same usable space is generally the better financial decision unless light, garden or layout points strongly one way. The clean summary is that a usable existing cellar is often the lowest-cost way to add a room, a dig-out is usually the dearest, and a rear extension sits in between and frequently wins where the cellar would need significant excavation.
Frequently asked questions
Is converting a cellar cheaper than an extension?
If the cellar already has usable headroom and sound walls, conversion at around £1,000–£2,000 per square metre often undercuts a rear extension at £2,000–£3,000 or more. If the cellar needs deepening or digging out, the extension is usually cheaper.
Why is digging out a basement so expensive?
A dig-out involves sequential underpinning, excavation, structural concrete, full waterproofing, party-wall agreements and a long programme, all of which add cost and risk. This pushes it to roughly £3,000–£5,000 or more per square metre.
Does a cellar conversion keep my garden?
Yes. Because a cellar conversion uses space beneath the house, it adds a room without consuming any garden, unlike a rear extension that builds outwards into the outdoor space.
Sources & further reading
Figures on this page are typical UK ranges drawn from published sources and depend on your specific property. They are guidance, not a quotation.