Building Plots/Self Build - Good Investment?
Discussion
I read in the Sunday papers about a couple that had bought a plot of land, purchased materials for a wooden frame house, contracted somebody to build it and pocketed a 95% profit (though I think they lived in it for 18 months and didn't have to pay CGT as a result).
They found the process very straightforward, though they may have been lucky.
Does anybody on here have any thoughts about the ease of finding and buying the right plot and what pitfalls might arise. Is it such a good means of investment at the moment?
Thanks
"Reg"
They found the process very straightforward, though they may have been lucky.
Does anybody on here have any thoughts about the ease of finding and buying the right plot and what pitfalls might arise. Is it such a good means of investment at the moment?
Thanks
"Reg"
From a Capital Gains Tax point of view, self build is treated the same as if you bought a fully built house in the normal way. No matter what type of house you buy, if you have used the house at any time as your main residence, you will obtain some relief from CGT. Obviously, if it was your only or main residence, you receive total exemption. If it was your only or main residence for some of the time you owned it, you will receive partial exemption.
One of the main savings to be obtained on self build is that the person doing the building can obtain refunds of the VAT he has been charged on the purchase of the building materials and labour costs incurred in the building process. If this VAT relief is obtained, the "base" cost for CGT purposes will obviously be lower than it otherwise would have been but that nmay or may not be an issue as explained above.
One of the main savings to be obtained on self build is that the person doing the building can obtain refunds of the VAT he has been charged on the purchase of the building materials and labour costs incurred in the building process. If this VAT relief is obtained, the "base" cost for CGT purposes will obviously be lower than it otherwise would have been but that nmay or may not be an issue as explained above.
I've been looking into doing this for 12 months now. The house we want to build is a timber framed 4 bed, requiring a minimum plot of 1/5 acre. Build cost including most fixtures and fittings is approx 130k. Big trouble comes about when you try to find land. Any land round my way (Cambs/Beds with planning is likely to cost 200k upwards, and anything without current planning has a reason for being sold with no planning.
There are a lot of companies who sell investment plots for 15k etc but in most cases there is little or no chance of planning ever being granted on these sites, often its a farmer whos divided up a spare field to sell off (often next to a new build development) as individual building plots. Having spoken to several planning depts about these they often say these are the least likely to ever gain planning, especially down to the way they've been sold and marketed.
If you can find the right piece of land, for the right price then do self build as you WILL get far more than you ever would buying used. Else, be very wary.
There are a lot of companies who sell investment plots for 15k etc but in most cases there is little or no chance of planning ever being granted on these sites, often its a farmer whos divided up a spare field to sell off (often next to a new build development) as individual building plots. Having spoken to several planning depts about these they often say these are the least likely to ever gain planning, especially down to the way they've been sold and marketed.
If you can find the right piece of land, for the right price then do self build as you WILL get far more than you ever would buying used. Else, be very wary.
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