Building your own home is a dream of many people and can result in a home of your own design together with some major cost savings.
Getting such a project off the ground is not as straight forward as a house purchase but can be achieved with a little background knowledge.
Here is my guide to starting a self build project.
Finding a plot of land
Finding the right plot of land can be very difficult as good plots can be snapped up very quickly by keen developers.
So where do you start?
Here are some options.
- Estate agents - Although estate agents are mainly involved in selling property they are often asked to sell plots of land, or land with a derelict building, that would be suitable for a self build project. I would suggest that you contact these agents on a regular basis so that they realise you are keen to buy and hopefully something will crop up.
- Land agents - These work in a similar manner to estate agents but deal exclusively with land. They often work closely with the large house builders but do come across single plots which would be perfect for a self build.
- Internet - There are several sites (such as Building Plot and Perfect Plot) that offer plot search facilities which allow you to search a large database of land currently for sale.
- Auctions - Register with all the property auction houses in the area in which you are interested and arrange for them to send you a catalogue for each auction event. You need to be cautious when buying land through an auction and make sure you have done all your research on potential plots.
- Personal search - Take a drive around the area in which you are interested and look for pockets of land for sale and derelict properties that could be used for a self build. Also make enquiries with your local council as they may have land available for sale or maybe a useful lead or contact.
Obtaining a self build mortgage
The difference between a self build mortgage and a house purchase mortgage is that the funds are released in stages rather than on completion.
Every self build project has clearly defined stages, from the digging of the foundations through to the final fix, and at each stage the value of the property will increase. As the property increases in value the lender will be prepared to lend more money to carry on the project.
There are two types of self build mortgages defined by whether you get the funds in advance of each stage, or in arrears of each stage.
The normal mortgage would be on an 'arrears' basis where the lender will release money to buy the plot, typically 50% - 80% of the purchase price or value of the land. Once building work starts further funds will be released at agreed stages in the project.
An advance payment mortgage will advance funds to buy the initial plot as well as prior to each stage being built, rather than after each stage as in the arrears mortgage. This type of mortgage is particularly helpful to people who have limited access to funds and therefore for whom cashflow is going to be a major problem. However, you will still need to have some funds available as advances for the initial plot will be between 75% and 95%. Obviously, the cost of this type of mortgage will be higher but does open up self build to a group of people who would otherwise be excluded.
I would always advise that you contact a mortgage or financial adviser who specialises in self build mortgages.
Choosing an architect
An architect can not only design your house but also help you through the planning process and comply with building regulations
I would advise that you contact at least three firms that specialise in self build projects of the type you are planning. Discuss with them your project and get some idea of the fees they would charge. Ask to see projects on which they have worked and any customer feedback they may have collated. Your final choice should be the architect that, not only will produce what you require, but also you feel comfortable working with.
Structural engineer - will I need one?
If you are using the services of an architect then you may feel that you do not need to employ the services of a structural engineer. However, if you are going to be building anything that is out of the ordinary then consulting a structural engineer may well save you thousands of pounds.
Basically an architect will design your house but the structural engineer will make sure it doesn't fall down.
If in doubt call him out.
Finding a good builder
It is always best to get a recommendation, if you can, but remember you are building a house here so the old boy who laid your neighbours patio may not be right for this project.
Why not talk to people locally who have had major building work done, or if you are using an architect ask him for the names of builders who he feels have done a good job.
Make sure you get at least three quotes as, believe me, they will differ widely.
Project management
This is one area of a self build project that is massively underestimated. This isn't a role that anyone can take on, it demands the ability to juggle the ordering of materials, setting build priorities and managing every aspect of the build.
If you have experience in project management or have a methodical mind and are good at planning, then by all means do it yourself. Otherwise, your architect may offer this service or will be able to recommend a good project manager to you.
Taxation
There are special tax allowances for those building their own home.
- VAT - When doing a self build you will be able to claim back any VAT paid out for building materials and services. This can save thousands of pounds over the term of the project.
- Stamp duty - This will only be paid on the purchase of the land and not the value of the finished property. Land purchased for £125,000 or less will not be liable to stamp duty and land purchased for more will be liable for between 1% and 15% of the purchase price.
