Did you know that more than 1000 people every month begin their own self-build project? It’s an appealing idea because when you self build, you should be able to get exactly what you want or need from your new property.
You can also get a home for considerably less than it costs to purchase a new home and make a significant ROI. According to BuildStore, completed homes will typically be valued at 20% more than the cost for both construction and the land purchase. So, let’s explore the costs of a self-build project, factors that impact the overall price and issues to consider.
Individuals will be able to keep the costs somewhere between £150,000 and £250,000 for the average sized family home of about 100 metres squared
It is difficult to provide a fixed standard cost for a self-build home because they are all different. It depends on factors that include:
That said, when you are first looking into this possibility, it’s best to explore the average costs. A self-build home can be completed for as little as £80,000 if you choose a good area, keep the design simple and complete the majority of the work yourself.
If you, however, want a grand home, with multiple bedrooms and more than two floors, that is built by a professional company, the cost can be as much as £450,000. Be aware that typically, individuals will be able to keep the costs somewhere between £150,000 and £250,000 for the average sized family home of about 100 metres squared.
Mortgage lenders will typically only release the capital once you reach certain levels or stages of the self-build. For instance, once the foundation work is complete, they will send a surveyor to inspect the work
When completing a self-build, you might be working with savings or investments that you have gathered over the years. If you are building entirely out of your own pocket, cash flow won’t be an issue.
However, most self-builders will require some type of mortgage and you need to consider how this will be handled.
Mortgage lenders will typically only release the capital once you reach certain levels or stages of the self-build. For instance, once the foundation work is complete, they will send a surveyor to inspect the work.
If the work has been completed to the standards they expect, they will release the capital for the next stage and proceed from there. You must keep this in mind when considering the different costs of your property.
Be aware that this also protects you from a potential disaster. Builders can often plead for you to release more cash, to complete a project, potentially because their own business has gone bust. By staggering the capital, you can keep the cost and payments under your control.
This does impact the monthly payments too. Since you are not immediately gaining access to all the capital, your initial monthly payments will be low. Ultimately it could take you significantly longer to pay off the loan for a self-build.
The rule here is simple. The more involved you are, the less you will need to pay
There are various different paths you can take when building your home. These can also impact your cost. It’s all about determining how hands on you want to be. The rule here is simple. The more involved you are, the less you will need to pay.
However, there are certain areas where you will always need to hire a pro. Only trained professionals can set up the electric wiring on a new property.
As such, you should consider self-managing with the contractor. Here, you will hire separate tradespeople directly to completely different jobs. You will be responsible for purchasing the materials necessary to complete the build and you will complete bits and pieces of DIY too.
You can use a main contractor along with several subcontractors. You will still be responsible for finding the contractors that you need for this job and it can be a difficult decision. It’s important you maintain the level of quality that you want.
Most mortgage lenders will only provide finance for simple, straight forward design work
You may have been dazzled and inspired after watching a few episodes of Grand Design. If you have money to burn then you can create your home with the type of stunning features that you might have seen. However, most self-build designs are modest to keep the budget under control. This is also crucial if you are applying for a mortgage to get your self build off the ground.
Most mortgage lenders will only provide finance for simple, straight forward design work. Ultimately, you need to ensure that the home is easy to value. Remember, a home with a square floor plan is always going to be the ideal option.
You want to keep the number of angles low too as this increases cost and if you are on a fixed budget do not even consider the possibility of curved walls. This will cause your cost to balloon and little over a dozen lenders in the UK provide self build loans. Though, this number is quickly growing.
The simplest way to think about design is to consider how a child would draw a home. A square property with two or three bedrooms and typical design or build will always be the cheapest option for self build enthusiasts.
By 2010, the average home provided 67.8 square metres for living space and this is the record low for the past ninety years
You won’t be surprised to learn that the size of the home does have an impact on the cost. A larger home is always going to be a more expensive project because it’s based on cost per metre squared.
However, it’s worth noting that in 2019, the magnificent grand home is no longer than the traditional build. By 2010, the average home provided 67.8 square metres for living space and this is the record low for the past ninety years.
This is roughly about the same size as a London double-decker bus. Although it is worth noting, this does not include hallways or the staircase.
Even the rooms in the home have been steadily shrinking. In 1970, the typical living room was 24.89 square metres but in 2018 this has dropped to just 17 square metres. Kitchens have suffered a decline as well though are still roughly 13.4 square metres.
There are fewer bedrooms in the typical newly built home too. In the ’40s the average home had an average of 3.6 rooms. Today, typical homes have just 2.9. That drop may not seem significant but it means plenty of homes are being built without a second bedroom.
Location, location, location is always one of the most important considerations when thinking about self-building your home. The location of the new self-build will determine a significant level of the cost.
This is often new the level of demand and the labour available in a particular area. It is worth shopping around and looking at quotes from a few different builders if you are not completing a true self-build.
Some differences in the cost are understandable and likely expected. For instance, building around London is always going to be the most expensive option due to the value of land and property in this area.
If you are keen to self build in the North of England, you can expect to pay far less for this type of project.
So, the total cost for a self-build of good quality using self-managed subcontractors in greater London will typically be around £119,000. In the south-east, the cost is considerably cheaper at approximately £104,500.
Comparatively, in the North West, you can expect to pay close to £95,000. The Midlands, Yorkshire and Wales provide the cheapest locations, each offering an average of around £91,000.
The figures above are based on a home of 100 square metres with 2 storeys. If you need a larger home or more levels, you should expect to pay a higher price.
Be aware this is an example is based on an expert handling all the work for you. This is always going to be the most expensive route to take when planning the costs of your home
During the planning stage of your self build, be prepared for the fact that there are a variety of different costs to consider. Below you will find an example cost break down in metre squared from a construction company located in Oxfordshire. These are
Pre-construction - £100
Substructure - £120
Superstructure - £450
External finishes - £280
Services and fit-out - £500
External Works - £100
Prelims - £170
Pre-construction involves the first stages of the build including investigating the site, demolition work and clearance of the debris. New utilities will also be included in this cost.
Substructure involves everything from drains to insulation and floor slab, While the superstructure involves internal walls, upper floors, insulation and roof structure.
External finishes may include the tile for the roof, wall cladding and gutters.
Services and the fit-out are far more comprehensive including decorations, the bathrooms, the kitchen tiles, floor finishes and more.
External works are everything from the driveway to turfing the garden.
Finally, preliminary costs cover health and safety, scaffolding, as well as site management. Basically, this is what you’ll pay to ensure that the project is being handled the right way.
As you can see, the services and fit-out are the most expensive piece of the breakdown at roughly 28% of the total cost.
By breaking down these costs, we can also find an example estimate of the total charge for the home.
If you were building a home that was 100 square metres, you would need to pay roughly £180,000.
For a 3-4 bedroom home that reached 150 metres squared, you would need to pay £270,000.
Be aware this is an example is based on an expert handling all the work for you. This is always going to be the most expensive route to take when planning the costs of your home. However, if you choose the right team it will provide peace of mind that everything is being completed to the level of quality that you would expect.
It’s worth noting that this does do not include a variety of other fees. For legal costs, you could be expected to pay between £500 and £1000. This will ensure that your home is completed and meets standard regulations. It will also ensure that if anything does go wrong, you are protected.
You will also need to pay land tax and stamp duty. That’s 1% for property valued between £125,000 to £250,000, 3% for homes up to £500,000 and 4% for anything over this.
You may also need to pay for planning application fees too which will be just over £300 for the average self-build. This can become more expensive if your plans continuously get rejected.
You may find that these costs are covered and included in a fixed price offered by the main contractor. This is another benefit of spending more to get all the work completed by a professional. Everything you need can be included in the initial quote you receive.
Similarly, you will also save money if you complete 75% of the work and hire contractors for the other 25% rather than the opposite set up
If you’re eager to ensure that you reduce the costs of building your new home as much as possible, there are various steps to consider.
Ideally, you should aim to complete as much of the work yourself as possible. If you can self build in a literal sense, you’ll see significantly lower costs than hiring workers. Similarly, you will also save money if you complete 75% of the work and hire contractors for the other 25% rather than the opposite set up.
Many self-builders will not do this because they won’t have the knowledge or experience to complete the bulk of the work. Remember, attempting to complete work you are not skilled for is a false economy. Eventually, you’ll need to hire a team to correct your mistakes.
The good news is that there plenty of areas that everyone can complete themselves. You can:
Manage the project - make sure that everything is proceeding on schedule and that all the different pieces are in place.
Purchase the right material - shop around for suppliers and you will immediately save on costs before building work even begins.
Decorating - There’s no need to hire a decorator if you are handy with paint brush and roller.
Basic landscaping - you may not be able to lay the foundation of the home. However, with the right tools, you could complete a significant amount of work on the garden yourself.
Since we mentioned building materials think carefully about your primary material. Masonry is often the cheapest and approximately 15% of building work is based on the cost of the external walling. Blockwork provides the greatest saving per metre. However, do be aware that while you will save originally, you might find that it costs you more in the long term.
You need to consider individual materials too such as windows and doors. Self-builders are often keen to invest more here to get the aesthetic that they want. So, for instance, you could be anything between £13 and £19,000 for softwood casement windows.
In contrast, flooring can vary dramatically depending on the level and type you are choosing. If you use softwood joists, expect to pay up to £19 per metre squared. That’s roughly £3,800 for the full first floor.
These costs will add up and that’s why you need to a budget in order and ready before you start work on your self-built home. If you don’t you will have a larger than expected bill and be unable to place all the costs.
You might assume that you will definitely need an architect when completing a self-build project. However, this will not always be the case. If the plan of the home is kept simple and complex ideas are cut out, you do not need a licensed architect.
Hiring an architect will cost you thousands before you even begin building. As such, it’s always worth taking this into consideration. There are experts on the market. Able to complete the same type of work without the title and thus the cost of this particular hire.
The cost of building your home can be quite low. This will always depend on the various factors that we have discussed above. However, it is possible to complete a home build for a standard smaller property for less than £100,000.
If you are keen to include some more exciting possibilities in your home build plan, the cost could reach £150,000. However, if you take the right steps, there is no need to go any higher than this. It simply depends on what you want from your home build project.
Assuming then, that you are not looking to build a mansion, you could see greater savings with a self build
For many new homeowners, this is going to be the most important question. Could building your home save you money compared to purchasing a new property on the market. The answer is an emphatic yes. Several years ago, former planning Minister, Nick Boles delighted an audience at Grand Designs Live today, suggesting that self builds provided a cheaper alternative when entering the housing market.
Interestingly, the UK has fallen behind with this concept compared to other countries. In countries around Europe such as Germany and France, 60% of homes are self-built while across the pond 40% are custom built through America. In 2014, the UK percentage of self-build homes was stuck at 10%. Since then, however, there has been significant growth. More people than ever are exploring self build options, largely thanks to a commitment from the government to help keep the costs low.
Assuming then, that you are not looking to build a mansion, you could see greater savings with a self build. You may even be able to afford a larger property. For instance, the typical self-build home could be completed for as little as £84,000 if you complete your own work. If you hire people to complete it for you, this rises to close to £150,000 but it’s still lower than the new build average of £190,000.
Another thing that needs to be taken into consideration is stamp duty. Whether you are buying a plot of land to build on, or an existing house, you are going to need to pay stamp duty to the government. It is the case that when you buy land, you are often going to make a considerable saving here.
Stamp duty is calculated based on the value of the land, and the reason that you will find it cheaper if you buy land to build on is that there is not already going to be a property on it. As such, when it comes to this particular cost, you are going to find it more affordable to build your home than to buy an already existing one.
One disadvantage of building your home is the interest rates. You will typically find that self build interest rates are higher. Whether you’re looking at two-year fixed or variable rates, you may find that interest starts at around 4.5% and will commonly easily exceed 5%. In comparison, interest rates for new builds in the UK are currently at 1.7%.
You never want to be in the position the building of your home has to be stopped because something has gone wrong and you cannot afford to fix it
Even if you have a solid design and plan for the process, things could always change during the completion of the project. It is important for you to keep this in mind at all times, and have some extra money left behind for any unexpected circumstances.
An example of this would be if something gets damaged and you need to pay to replace it. This could be anything from a pipe that goes under or through the area. To any of the materials getting damaged. You are going to be responsible for paying for everything from start to finish, so you want to keep back what is known as a rainy day fund.
How much should you keep back? Well, it depends on how large your project is. The best way to do this is to look at what you and the professionals aiding you. Think the total cost of the project is going to be and then keep around 5-10% extra for this purpose.
You never want to be in the position the building of your home has to be stopped because something has gone wrong and you cannot afford to fix it. For this reason, it is always better to overestimate the potential cost than to underestimate it.
You also need to think about the hidden or unexpected costs of building your property. There are a few issues that will lead to a higher price tag than you previously expected. Are you building in a remote location? If so, then the cost of transporting materials alone will ensure that you are paying more than the standard average price even for a smaller home.
Sloping ground and poor ground conditions will also lead to a higher cost because it makes the build more difficult. This is why it’s important to get the land surveyed before you purchase your plot. It is also why many individuals will pay extra for a better quality of land at the start of the build.
You need to consider the quality of the building materials you are planning on using. If you are looking to build using materials that are more luxurious, then this is going to cost you more than if you were to use the standard ones.
Different contractors will offer you different quality levels, and as well as this there are things that will be offered by higher quality contractors that you will not receive if you choose to go for standard.
An example of this would be the bathroom fittings that will go into your home. If you choose a standard option, then you will receive basic fittings but if you choose to go for something more luxurious, your home will benefit from the best on the market.
The prices here are going to vary rather dramatically, so you need to consider every piece of this puzzle. Your budget is going to play a big role too because some people are not going to be able to pay £500 for a wash basin but will find that the standard option suits them just fine.
There is a middle option which many contractors refer to comfortable, which is one step higher than your standard build, and one step lower than luxury.
You can choose to just have standard roofing which is more than acceptable, and this will make the cost of building your home slightly lower. However, some people prefer to go one step further here and add bespoke options to their new property. If this is something you are interested in, you need to take this into account in the earlier stages because it is easy to overlook it at a later date.
The best thing that you can do here is to calculate the extra cost per square meter for the entire roof space. You can make this slightly cheaper by choosing second-hand slates which usually cost around £35 per square meter. Or, you can go to the higher end of the scale here and choose something like Reed thatch which is more in the region of £80 per square metre.
Something that you need to be constantly thinking about is the amount of VAT that will be added to the building materials and project. The prices that we have mentioned above are not inclusive of this so the cost could be slightly higher. While this is the case, there are ways to get your new build to be zero-rated when it comes to VAT. And all you have to do is comply with a certain set of rules.
Or, you might have already paid the VAT on all of these items, in which case you could be entitled to a refund that you can apply for through the government website. If you are thinking about applying for a refund, then one of the following options must be the reason:
The property is separate and self-contained
Your property is not going to be used for business purposes
The property is for you or your family to live in or holiday in
You will not be entitled to a VAT refund if one or more of these criteria are not true. The same applies if you are undergoing a conversion project. Some people prefer to convert buildings that are already there and build a new home from this.
If you are choosing to build your home this way, then you still could be entitled to a refund on VAT but this will only be true if you are converting a non-residential building to a residential one and it has not been lived in for the past ten years.
While it might seem small compared to other costs on this list, it is still important to keep insurance in mind. You need to have a self-build insurance policy in place. This can range from about £500 to £1000 and will depend on the design of the contract. You need a warranty that covers ten years for everything from defects in your design to workmanship as well as materials.
Furthermore, you need to think about liability, storm damage and theft. Be aware that the liability can not exceed 10% of the home value or £100,000 if you have a national house-building council warranty. The cost will usually be approximately 1% of the contract value.
As you can see then, there are various different issues and options to consider when completing your self-build. Regardless of whether you are new to this industry or working on your fourth or fifth self build, it’s best to start with an online calculator.
This calculator can provide an average cost of your home based on a variety of factors including, size, number of rooms, location, number of floors and quality of the build. Once you have a rough estimate, you can then work towards putting a full plan in place.