There are quite a few good reasons why building your own house can be a good idea. The main one, for most self builders, is the ability to build your own house exactly the way you want it. However, there can be major financial advantages to building your own house: A well managed self building project can deliver a house that is much cheaper, perhaps 30% cheaper, than buying a ready made house. For example, a house that would cost you £250,000 to buy on the open market could perhaps be built, depending on the land cost, for as little as £175,000 – a £75,000 profit.
There can also be tax advantages, including: Big savings on stamp duty (you only pay on the value of the plot not the finished house). The chance to reclaim VAT paid on materials and some other expenses. Capital gains tax advantages even if you self build regularly, assuming you live in the property yourself originally.
Downsides to the self build include the time and work involved, and the difficulty in finding somewhere to self build in the first place.
Finding a self build plot
Finding a plot for self build is perhaps the most difficult parts of the whole process. Single building plots that have or might get planning permission can be very hard to find, especially in popular locations. So, spread your search as widely as possible. Rather than looking in just your favourite area look for available plots across your entire region and the decide if you’d like to live there.
Self builders often have to think outside the box to find suitable plots. Here are some ideas: Consider buying a house with a garden large enough to build on, then resell the original house later. Consider buying a cheap property, perhaps one that is derelict or has structural faults, and using that as a building plot. Look for a commercial site that could be utilised. Get together with other self builders to buy and sub-divide a larger plot. All these will be contingent on being able to obtain planning permission of course.
Some of the new Housing Zones (more details of what these are here) will also have provision for self build
As well as looking through agents and websites suitable sites for self build can also be found at auctions.
Financing a self build house
Most lenders won’t lend for self build, so you’ll need to approach a specialist lender or seek the help of a broker to find the best deals. As a self builder you can take both fixed rate and tracker mortgages (as well as standard mortgages) but fixed, tracker and standard rates are likely to be between 0.5% and 2% higher than for ‘normal’ residential mortgages. Some lenders also look for a 50% deposit, and the minimum deposit you’ll probably need is 25%.
The most important difference with self build mortgages is that the mortgage is released in stages as the work progresses, so you’ll probably need another source of working capital to help the work progress. Again, look at all the options: Selling or remortgaging your existing home or using personal loans for short term working capital may be suitable. (There’s reason self builders frequently move into an on site caravan!)
Designing your self build house
While the idea of designing your own house is something of a dream – and there’s absolutely nothing wrong with drawing up your own sketches of how you’d like your house to look and be laid out – it’s best to realise from the outset that it’s not practical for most people to do the whole job. The chances that your own designs will comply with local planning and building regulations are quite small.
An architect will be able to design your self build home for you and, usually, advise on the whole planning and building procedure too. It’s normally best to hire an architect who has self build experience and a knowledge of local housing types and styles and local planning regulations.
Another alternative to consider is to buy ‘off the peg’ plans from a self build plan supplier. This is likely to be cheaper, but you’ll have to accept a standardised design.
Building your own house
Decide from the outset what level of involvement you are going to have with building your own house. Actually physically building your house is a massive undertaking. If you’re interested in doing this be aware that the actual time needed including time it will take from your regular occupation could mean it will be more expensive, not cheaper.
The main options to consider are whether to hire a project manager (who may also be a builder) to oversee the project, or to be your own project manager. This will involve finding, obtaining quotes from, choosing, supervising and (the most difficult part!) co-ordinating all the individual trades yourself – and also, perhaps, sourcing and obtaining quotes for all the building materials needed. Again, even being ‘just’ a project manager can be a full time job in itself.
Tips for successful self build
Although self building is an opportunity to build your perfect home try and be practical too. If there’s a possibility you’ll want to move on at some point (many self builders build more than once) think about how your house will stack up as a resale proposition, in order to maximise its resale value. A swimming pool or six car garage might be perfect for you, but will it really add to the resale value of your property?
Self build is also an opportunity to add value, by using techniques or incorporating design features that commercial builders and developers aren’t always able to offer. For example, eco-friendly or PassivHaus homes, and properties that make use of advanced microgeneration, are popular with some self builders.