Should I self-build now?
Discussion
What do you think - is now a good time to sink my money into a plot of development land and try to build a house for profit?
Rough cost of the land is £70k. 4 bed detached house hopefully worth c.£225k once finished.
is £100k a reasonable estimate to build a 'normal' 4-bed detached house with attached single garage in a pretty ordinary area of Cheshire?
Rough cost of the land is £70k. 4 bed detached house hopefully worth c.£225k once finished.
is £100k a reasonable estimate to build a 'normal' 4-bed detached house with attached single garage in a pretty ordinary area of Cheshire?
Tough call, but a builder I know has stopped all dev builds as Raw MAt pricves have rocketted.
He has a plot he paid 150k for, to put three small exec homes on, would have been c.850k for the final asking prices say 18 months back.
And would have cost about 240k in RMs for the three, about 90k labour (plus him). So he's have had about 360k out of it.
Now, houses potentially worth 650k! RMs are extimated to be over 300k.......so you can see how the viability has dminiished!
He reckons land prices should have plummetted as a result, but less land on the market ie lower supply has kept prices high......hence the viability of self builds is much less than it was...
And whilst I know you may be looking to get a house not make a profit, the numbers wont help you finance it or mortgage it all....
So be careful is my advice!
He has a plot he paid 150k for, to put three small exec homes on, would have been c.850k for the final asking prices say 18 months back.
And would have cost about 240k in RMs for the three, about 90k labour (plus him). So he's have had about 360k out of it.
Now, houses potentially worth 650k! RMs are extimated to be over 300k.......so you can see how the viability has dminiished!
He reckons land prices should have plummetted as a result, but less land on the market ie lower supply has kept prices high......hence the viability of self builds is much less than it was...
And whilst I know you may be looking to get a house not make a profit, the numbers wont help you finance it or mortgage it all....
So be careful is my advice!
BarnatosGhost said:
Rough cost of the land is £70k. 4 bed detached house hopefully worth c.£225k once finished.
is £100k a reasonable estimate to build a 'normal' 4-bed detached house with attached single garage in a pretty ordinary area of Cheshire?
Have you found a plot for £70k in Cheshire? Our experience is that it is signifcantly higher than average...but guess it depends on size and outlook etc etcis £100k a reasonable estimate to build a 'normal' 4-bed detached house with attached single garage in a pretty ordinary area of Cheshire?
I would say you are being rather ambitious to build a 4 bed house for £100k...pick up/browse through the house build mags at your newsagent.
I would budget say £200-300k but of course there are many variables.
Does the plot have planning permission...that could take ayear to come through
Scooby_snax said:
BarnatosGhost said:
Rough cost of the land is £70k. 4 bed detached house hopefully worth c.£225k once finished.
is £100k a reasonable estimate to build a 'normal' 4-bed detached house with attached single garage in a pretty ordinary area of Cheshire?
Have you found a plot for £70k in Cheshire? Our experience is that it is signifcantly higher than average...but guess it depends on size and outlook etc etcis £100k a reasonable estimate to build a 'normal' 4-bed detached house with attached single garage in a pretty ordinary area of Cheshire?
I would say you are being rather ambitious to build a 4 bed house for £100k...pick up/browse through the house build mags at your newsagent.
I would budget say £200-300k but of course there are many variables.
Does the plot have planning permission...that could take ayear to come through
If I'm looking at 1900 ft2 and £100k I'm looking at £53 per ft2 - is £60 more realistic? That would give a £114,000 build cost. Still manageable if I'm correct at £225k final value?
...and to put the build costs per square metre/square foot into context, I'd suggest that the absolute bare minimum size that would be worth self-building as a 4-bed house would be about 1,250sq. ft. (116 sq. m.) gross internal area, and a more generous/comfortable size would be in the region of 1,600-1,900 sq. ft. (148-176 sq. m.).
Some of the really compact developer 4-bed houses are down at around 1,000-1,050 sq. ft., but they're pretty pokey at that size, so not the sort of thing that most people would want to go to the time and trouble of building for themselves.
Some of the really compact developer 4-bed houses are down at around 1,000-1,050 sq. ft., but they're pretty pokey at that size, so not the sort of thing that most people would want to go to the time and trouble of building for themselves.
Too many variables to be certain as it depends on plot, services, build type, location.
You could build a very nice house for £120k, plus your land totals £190k. If it's worth £225k when finished then that's 15.5% profit which isn't great. If you're building for profit and lower the spec you could get away with total costs of £170k which leaves you £55k or 24% profit which makes it more viable.
My advice is do your sums, or get a QS to look it over for you, it would be money well spent.
You could build a very nice house for £120k, plus your land totals £190k. If it's worth £225k when finished then that's 15.5% profit which isn't great. If you're building for profit and lower the spec you could get away with total costs of £170k which leaves you £55k or 24% profit which makes it more viable.
My advice is do your sums, or get a QS to look it over for you, it would be money well spent.
Depends how you build and to what standard. If you're a builder yourself, or can give up work and spend your time on site, you can get down to £500/sqm - at least the 'success stories' in the self-build mags would have you believe. In practice that's a pretty bog-standard house (cheap kitchen, doors and windows, basic combi boiler and insulated to basic levels) and a novice builder has very little chance of getting costs that low.
Your house is about 180sqm, and most build mags would suggest a price of around £1000 per sqm, so budget £180 plus £20k contingency. If the plot is going cheap, ask yourself why. If there are poor ground conditions, it can cost you your full contingency just to get to ground level - and there are horror stories of houses that have cost £300K just to get stable foundations. Services can also be expensive - check that you have mains electric, water, sewage and ideally gas to site.
The advantage of building for yourself is that you're not obliged to make a profit, so you can build on sites that are just not worth small developers bothering with. In the current climate, materials have become expensive, but some labour is now getting quite cheap if you can search around.
Building your own home also gives you the chance to improve things over the very nasty quality you get from a typical housing estate house. Given that fuel costs are only going to go up, you can insulate your home to top spec for a sensible cost, and get your heating bills down to a bare minimum. That has to be a good investment. The danger is that you can end up spending a lot of money putting in every last improvement into your house. You'll get a lot of house for your money, but that might not be reflected in the resale price if the local market is not interested in 'posh' homes.
Oh, and get a copy of the House Builder's Bible, which explains the process and costs http://www.ovolopublishing.co.uk/books_housebuilde...
Your house is about 180sqm, and most build mags would suggest a price of around £1000 per sqm, so budget £180 plus £20k contingency. If the plot is going cheap, ask yourself why. If there are poor ground conditions, it can cost you your full contingency just to get to ground level - and there are horror stories of houses that have cost £300K just to get stable foundations. Services can also be expensive - check that you have mains electric, water, sewage and ideally gas to site.
The advantage of building for yourself is that you're not obliged to make a profit, so you can build on sites that are just not worth small developers bothering with. In the current climate, materials have become expensive, but some labour is now getting quite cheap if you can search around.
Building your own home also gives you the chance to improve things over the very nasty quality you get from a typical housing estate house. Given that fuel costs are only going to go up, you can insulate your home to top spec for a sensible cost, and get your heating bills down to a bare minimum. That has to be a good investment. The danger is that you can end up spending a lot of money putting in every last improvement into your house. You'll get a lot of house for your money, but that might not be reflected in the resale price if the local market is not interested in 'posh' homes.
Oh, and get a copy of the House Builder's Bible, which explains the process and costs http://www.ovolopublishing.co.uk/books_housebuilde...
Edited by Tuna on Friday 26th June 11:28
How are you funding the build ?
I don't mean to pry but I suspect a bank won't touch you with those figures as they will look at the worst case, that being whether they can build it themselves if you default, and whether the margin is of an acceptable level that should they need to get rid they can recoup thier monies.
If its you're own money you obviously don't have this issue.
With regards to build costs, I can't see how you can do it for £60/sqft. Yes, its do-able to those who do it for a living (although spec would be basic), however you also have to bear in mind that you will incur VAT on certain things which I suspect you won't be able to reclaim (unlike a builder/developer). I think you should work on around £80/sqft and look to get it down to around £70/sqft when on site if possible.
It doesn't honestly stack up to me as a see a self build as a home you want to stay at for a long time & build to a spec you want. This would obviously include some luxuries/toys and that simply isn't achievable on the budget you have, nor will you probably retrofit these as the costs at this stage are much higher, and the inconvenience of it all.
Can you not just buy the land (if you don't own it at present) & wait until you have around £100/sqft to build ?
Good luck which ever way you go. You'll either love it or hate it (the build that is) but definately worth it at the end (in most cases !!!).
I don't mean to pry but I suspect a bank won't touch you with those figures as they will look at the worst case, that being whether they can build it themselves if you default, and whether the margin is of an acceptable level that should they need to get rid they can recoup thier monies.
If its you're own money you obviously don't have this issue.
With regards to build costs, I can't see how you can do it for £60/sqft. Yes, its do-able to those who do it for a living (although spec would be basic), however you also have to bear in mind that you will incur VAT on certain things which I suspect you won't be able to reclaim (unlike a builder/developer). I think you should work on around £80/sqft and look to get it down to around £70/sqft when on site if possible.
It doesn't honestly stack up to me as a see a self build as a home you want to stay at for a long time & build to a spec you want. This would obviously include some luxuries/toys and that simply isn't achievable on the budget you have, nor will you probably retrofit these as the costs at this stage are much higher, and the inconvenience of it all.
Can you not just buy the land (if you don't own it at present) & wait until you have around £100/sqft to build ?
Good luck which ever way you go. You'll either love it or hate it (the build that is) but definately worth it at the end (in most cases !!!).
Sorry, so you can.
Don't you claim it all at the end of the project though, so in theory you still have to finance any VAT element of the build for the programme of the works & then get it back later.
Obvioulsy this isn't a big issue, the main one being the idea of a self build being you're 'dream home' and unfortunately 'dream' & 'budget' don't go together.
Don't you claim it all at the end of the project though, so in theory you still have to finance any VAT element of the build for the programme of the works & then get it back later.
Obvioulsy this isn't a big issue, the main one being the idea of a self build being you're 'dream home' and unfortunately 'dream' & 'budget' don't go together.
thesilentpartner said:
Don't you claim it all at the end of the project though, so in theory you still have to finance any VAT element of the build for the programme of the works & then get it back later.
Obvioulsy this isn't a big issue, the main one being the idea of a self build being you're 'dream home' and unfortunately 'dream' & 'budget' don't go together.
VAT during the build shouldn't be too much of an issue. With interest rates so low, a short term loan should be servicable. Get a self build mortgage and you have a few more options with stage payments and so on.Obvioulsy this isn't a big issue, the main one being the idea of a self build being you're 'dream home' and unfortunately 'dream' & 'budget' don't go together.
As for dream and budget - yes, it's true you can find yourself looking at the built in cinema room and infinity pool brochures - but if you're building to a budget, you can make efforts to cut your cloth accordingly. The big problem is unforseen and incidental costs that bump up your final price. Someone here mentioned using a Quantity Surveyor - on a self build project it's barely worth it as your materials are fairly predictable (if you have a half decent builder) and a QS can cost thousands for even a domestic project.
From the original post, I'm guessing this isn't a big plot of land which is minimising the likely end valuation. If you're thinking of going this route, the first thing you should do is look at similar plots in the area and work out what you're getting for your money. Plotfinder have a service that lists land suitable for self-build - you might find that there's better land at a better price nearby.
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