Self build
Over the last decade the interest in self build homes has reached unprecedented levels and the buzz surrounding self build has prompted substantial media coverage. The strength of this trend is clearly evidenced in the shear number of books, magazines, and television and radio programmes dedicated to buying self build land and self build homes. Last year approximately 25,000 people went for the self build option and this figure is continuing to climb in 2005.
There are a number of reasons why self build has become such a popular option. For some people it is simply seen as an investment vehicle with the sole aim of making large financial returns. Other see self build as the opportunity to attain their dream homes on a budget and, as cost savings of up to 30% have been known, it's no wonder that first time buyers are attracted to this option.
The freedom to design your dream home is a great pleasure in a self build home project, although you are of course restricted by budget, and self build cost must be carefully monitored. In addition to the uniquely individual nature of a self build house, its key point is value for money: most experts agree that you get more home for your money when you self build.
Unless you are an self build expert you will probably need to enlist the help of an architect to turn you ideas into a viable self build project plan that can be realised within a set budget. You'll be working very closely with the architect throughout the project so it's important to choose the right architect from the outset and this will require careful research, negotiation and a strong awareness of your specific needs and expectations. The Royal Institute of British Architects is always a good starting point when you want to find an architect.
Finding self build land is always the most challenging part of the self build process as there are so many considerations e.g. location, planning permission status, size and cost. There are plots of land available all over the UK, with and without planning permission. If you are planning to commence your project immediately you will need self build land with planning permission, but be aware that you will be paying a premium for such land.
Self build land without planning permission is also widely available in the UK though it varies greatly in terms of its quality and future development potential. Self build land without planning permission sells for a fraction of the price of that which has planning permission, however your self build project cannot commence until permission has been granted and this is of course never guaranteed.
Self build your way to a property fortune
source: money.msn.co.uk
Here's how to make some spectacular gains in the housing market
A garage round the corner from me was sold for £170,000 the other day. It is not a big garage, in fact it is barely 29ft deep by 15ft wide, though it can hold two cars.
The inside is tatty: the concrete floor is badly rutted, the brick walls are bare and crumbling and the roof leaks in several places.
What makes this garage so valuable is not its location - we live in an area in Camden, north London, known locally as "Murder Mile" - but the fact that it was sold with planning permission for a two-floor work/live residential property on the site.
The price paid is a reflection of a small but important sidebar to the housing boom of the past two or three years, namely a sharp rise in the number of self-build properties throughout the UK.
Last year, for example, more than 50,000 self-build projects were completed, more than the total number of new properties actually erected by commercial housebuilders.
Why self-build?
The attraction of self-build is simple: it offers the chance to create the house of one's dreams cheaper, or to a much higher specification than if bought from a developer.
Alternatively, for the more commercially-minded, it can deliver 'instant' gains after construction, of 20% or more above the normal price increases enjoyed by the property market in recent times.
Taking the example of the garage above, local architects I have spoken suggest the build cost will come to £75,000-£100,000, as long as the 'spec' is not too outrageous.
An estate agent in the area suggests the property might eventually reach £350,000, a tidy profit of £80,000 or so on the combined purchase price and build cost.
No wonder more and more people are deciding to join in the market. If you want to take part, here are some points to consider.
What kind of person are you?
If you have a vast range of DIY skills, all the better. You can do loads of the work and save money.
But actually, you don't need them: it is possible to sub-contract every aspect of the build process to others, though that means sacrificing some of the potential gains.
The human qualities you will need most of all are:
Incredible patience - these projects always take much longer to complete than first imagined
The planning skills of a three-dimensional chess player - if you "self-manage", juggling between suppliers and builders will be supremely challenging.
Let's assume you have both these qualities in abundance. What next?
Read a lotR
You will need to get a feel for what is involved. The only way to do it is to read books and magazines covering the subject, as well as going to a number of self-build fairs where you can talk to the professionals and even attend seminars.
There are three monthly magazines widely considered as essential reading for any self-builders.
SelfBuild & Design
Build It
Homebuilding & Renovating
All three magazines are fascinating reads - if you're into this kind of thing - and their websites carry a mass of useful information.
They also have - and this is vital - lots of heart-warming stories of people who managed to build their dream homes against all the odds, saving tens of thousands into the bargain.
Find a plot
This is the difficult bit. You should go to surveyors, estate agents and auction houses in the area you are interested in. Also worth talking to are local authorities, church bodies, even utility companies. There are a number of online services that may be of use:
BuildStore, a building supplies site, has PlotSearch
PlotFinder, which is part-owned by one of the three magazines above
SelfBuild Plot Browser, also part of one of the magazines above
All three also have articles on what to look for and on some of the pitfalls to avoid. You will have to register and pay a fee, or subscription to use them.
Here are two tips worth bearing in mind:
1) When making an offer on a plot, always work out how much you will have to pay for the actual build process - and then add another 10 or 20 per cent. If the price of the completed property is still at least 20 per cent less than a comparable one from a builder, you have a bargain.
2) You don't have to find an empty plot. Many houses are on land that would be worth much more with a modern - perhaps larger and more attractive - property.
Estimating build costs
Here are several ways of doing this:
Rule of thumb: base it roughly on an estimated £50 per square foot, or £450 per square metre. This includes walls. For high specification houses (swanky bathrooms and kitchens, lots of hardwood, stone and glass) go up to £650 per square metre. Beware of problems on the site, which can add thousands to the final cost.
Be cheeky: ask a builder to quote for the work and then deduct 15% for doing it yourself. Or split the work into each trade job and ask for quotes for each item of work (harder, but more accurate).
The hard way: go through a builder's price guide (Spon's Builder's & Architect's Price Book, £69.50), available in all central libraries.
Or you can get it from this site
You can also try Mark Brinkley's The Housebuilder's Bible. Having read this book a few years ago, I think it's superb.
You can either borrow it from a library or buy it here
TIP: most builders won't be doing as much shopping around for their supplies as you might think: for them TIME is money, not materials.
By sourcing supplies more cheaply yourself, you could shave up to 5% per cent off total build costs.
Sort out the finances
There are a number of different areas to consider:
The mortgage: the biggest problem is often that of finding a lender that will agree to a mortgage in "stage payments", allowing you to pay as each part of the house is built. If you have money towards the land and some of the build costs, that will be a big help.
That said, here is a list of lenders that can help, with details of their mortgages available to self-builders.
Most existing online mortgage finders won't be able to help find a mortgage. But Charcol, which combines a mixture of online and telephone-based advice, will.
The short-term loan: there will be times when you are paying literally several thousand pounds of week to tradespeople and suppliers for items or services you need. No staged mortgage will be able to cope with all of this.
Be prepared to go to your bank. Alternatively, you may want to use a combination of interest-free credit cards deals and similar lines of cheap credit to temporarily fund the build project.
You can find details of credit cards here
The insurance: some of this is specialised stuff. You will need four types of cover -
Site insurance to cover against public liability, theft or damage from the site and employer's liability. You may also need legal expenses cover - if work turns out to be defective, you may need to take action against your builder
Structural warranties: this is protection against long-term failures in the work carried out to your house and will help when you sell the property on, as it protects for a fixed number of years after the building is completed.
There are specialised insurers who offer these services and it would be invidious to mention them now - you'll find out their names soon enough.
Saving on the VAT
Let's assume that you have managed to find land, come up with an architect's drawing, it was approved by local planners, you worked out the costs, found builders and are ready to start.
How can you save several thousands more pounds? Think of the VAT angle. Here are a few tips:
Building work is normally subject to VAT at 17.5%. But not new buildings. However, you can only claim once: all work AFTER you have submitted a claim for a refund will be liable to full VAT.
If you use non-VAT registered builders you won't be charged VAT on their labour.
Landscaping for new buildings is also zero-rated for VAT purposes, as long as it is carried out at the same time as the main build itself.
Listed buildings, residential conversions, renovations of empty buildings are zero-rated.
If you demolish and rebuild you will also be zero-rated.
For details of this and other money-saving ideas, go to the selfbuildit.co.uk site.
Or try the Customs & Excise site for more information
Finally
There is no question: you can make money out of self-build. But it does take time and organisational skills. If you have both, you could be on your way to becoming property billionaire.
As for me, I've just re-plastered the ceiling and laid a new floor to my own garage. Any takers?
