In part two of Michael Brash’s interview with Dr Paul Newman, Self Build Director at Potton – the UK’s best known self build homes specialists, we continue to investigate self building as a way to utilise your military technical and project management skills, invest your Service gratuities and tax free lump sums and begin to learn how self building could be the next challenge on the horizon…
How much does it cost?
It all starts with the budget, and indeed ends with the budget as well. Budgeting is not something that you think of once and then forget. It is an on-going process and something that has to be honed and refined throughout the project.
The first and, perhaps, the biggest expenditure is going to be the plot. In some areas, where house prices are low, that may be around a quarter of the eventual value of your home. In high priced areas, it may be two thirds or more of the end value. There is a simple formula for valuing land, which works in most cases and can be checked using prices from websites like Zoopla or Rightmove.
Don’t forget that you will need to factor in an allowance for conveyancing and that services have to be connected. Also, remember that you need to live somewhere during the course of the build.
Land costs + Build Costs x Margin (%) = End value
As we’ve explained above, land costs vary hugely across the country. Thankfully, material and labour costs are much more consistent, though there are still regional variations, particularly for labour costs. This is because if your plot is in an expensive area then it is likely that the construction trades working on the build are also having to live and pay their mortgages and rents in that same area.
As a general guide, it’s reasonable to assume that in most parts of the UK it will be possible to build for around £1400 per m2if you manage the build yourself. In less expensive areas this cost will come down, in more expensive ones it will go up.
If you decide to employ a project manager or use a builder then your costs will go up by maybe 8% – 15%. Clearly, it is also possible to save money by taking on some of the work yourself and spend more by increasing the specification of the build. It is easier to increase cost per metre than it is to reduce it but both are possible.
If you keep reducing material costs then at some point it will start to show in the quality of your finished home. The flip side of this is that there is always a more expensive way of building something. Everything from bricks, roof tiles, kitchens and bathrooms to media systems, floor finishes and wall paper are available at an incredibly wide range of prices. Ultimately, you need to create a budget specific to your build and you can’t do this properly until you have a design to price against and a level of specification and list of priorities clearly identified.
Can self builders obtain a mortgage?
Yes, there is an established market for Self Build mortgages with funding released at key stages during construction, rather than all at once on completion day. Currently, the lenders involved in the sector tend to be smaller Building Societies but several larger lenders are rumoured to be eyeing up the market and a few have already entered it.
Some lenders will lend on the land purchase or existing property and at key stages during and on completion of the build project. Others do not lend on land, but they will lend during the build period. Typically, lenders will provide:
- 75-90% of the purchase price or valuation (whichever of the two is the lower)
- up to 80-90% of build costs
- up to 75% of the growth in value of your project at key stages during construction
The range of products available mirror the more normal market and include, discount rate, fixed rate, tracker and offset mortgages. Rates of interest are slightly higher than standard house purchase/re-mortgage rates and inevitably arrangement fees vary from lender to lender as do tie in periods. Once your new home is properly habitable it may be possible to switch to a lower rate of interest.
Release stages vary from lender to lender but may be:
- Land (with the minimum of outline planning consent)
- Substructure
- Wallplate/eaves height (just before the roof structure goes on)
- Wind and watertight roof tiled
- First fix
- Second fix
- Certified completion
Your lender will want details of build costs and will need to be convinced that you are sufficiently competent to complete your new home.
How Can I Get Started?
The Self Build Academy provides an evolving range of events, seminars, workshops, courses and networking sessions (think coffee morning rather than business breakfast) that aim to equip self builders with the knowledge they need at every stage of their journey. The academy covers everything from finding a plot through to finishing off the build. It will instruct you on how to develop a design brief, establish and articulate your views on energy efficiency, provide opportunities to visit sites during construction and teach you how to build safely and efficiently.
SERVICE LEAVERS AND VETERANS SELF BUILD EVENT
Potton is hosting a one-day event for Service Leavers and Veterans interested in finding out more about self building. To register your interest, please visit www.potton.co.uk/pathfinder or www.selfbuildacademy.co.uk/pathfinderfreepass Details on the event will then be emailed to you.