The easiest thing to get wrong when embarking on a self-build house project is your budget.
Far too often we hear stories about couples and individuals splashing out on more expensive fittings, upgrading roofing tiles or splashing out on fancier glazing, then finding they have run out of cash for the next stage and have to borrow more.
Missing deadlines and falling several months behind schedule can also lead to a much bigger spend than originally planned so really, it’s important to stay on budget as much as possible. Going over budget and schedule means more than the direct cost of increased borrowing. There are also higher indirect costs due to longer time in alternative accommodation, longer journey times to and from work etc.
Setting A Realistic Budget
Absolute costs for self builds vary widely depending on the size of your build and the part of the country, as well as the features and materials you choose. A 160 M2 two storey self-build in the Midlands, completed to a good build quality with a single main contractor could cost around £150,000, or £940 per metre.
While this is considerably lower than average house prices in many areas, remember that this figure does not include the cost of land. Nor are you able to acquire a mortgage on most self builds - you will need to source the capital to fund the project yourself. You will also need to budget for accommodation during the build. If you own a second home this may not be an issue, but many self-builders have to rent, at market prices of £650 - £1,000 per month on family homes depending on the area.
How To Calculate Your Budget
Here’s a quick rundown of what you can expect to pay for the different stages of your self-build:
- Architect/Designer Fees. This is usually a percentage of the overall cost of your house so the bigger the property the higher the cost. It’s a good idea to at least think about the design and size prior to purchasing a plot of land so you can budget for that too.
- Buying A Plot. This will be the biggest cost in the project overall and will probably be around 30 to 40 per cent of your budget. Once you know this you’ll be able to work out the maximum amount you should spend on the self-build be taking the average cost of a similar property in the locale and deducting the cost of your land.
- Utilities. If your new plot is relatively urban then connection will probably cost something in the region of one per cent of your overall budget. If you’re in a rural location though you can expect to pay quite a bit more.
- Building Materials. It’s always good to go out to tender when it comes to the cost of the building materials since these will be pretty high, Overall though you can expect around 20 per cent of your budget to be spent on materials such as concrete, glazing, tiling, timber framing etc.
- Professional Expertise. Unless you are a qualified builder yourself you’re going to need the help of a number of individuals who are experts in the field. In addition to an architect, for instance, you will also need the help of a surveyor, engineer, solicitor and perhaps even a project manager. For this you should set aside around seven per cent of your overall budget.
- Labour Costs. This, of course, depends on how much work you are willing and able to do yourself. Presuming you work full-time though and need to contract it out, you’re looking at around a 25 per cent of your budget being spent on this stage.
- Insurance & Warranty. You’ll need insurance to cover yourself in case anyone gets injured on your property during the build, while a structural warranty will cover you for costs for up to a decade in the event a major defect is found and needs to be rectified. This could be in terms of design, materials, draining or workmanship. The warranty can also be transferred on to a new owner if the property is sold within that 10 year period. The cost for both should work out a mere one per cent of your overall budget.
- Contingency Fund. With such big projects as self-building a house, it’s always wise to set aside around 10 per cent of the cost of the project for contingencies that often arise – and usually nearer the start than the end of the construction.
Finally, you will no doubt be glad to hear you can recoup some of the money spent – by claiming VAT back on your self-build materials and labour! This can save you up to 20% of your build costs, depending on the rate of VAT paid – e.g. building materials imported from abroad may be subject to a different rate of VAT. Your VAT refund application must be submitted to HMRC within three months of the build completion date, and include documentary evidence of all expenses claimed in the application. You can download form VAT431NB from the HMRC website to begin your refund claim.
More Information About Self Building
Find out more information about going ahead with a self-build project by contacting our team of architectural designers today. We offer a combined design and build service that cuts your build time and allows you to save money and hassle compared to tendering multiple contractors individually.
To explore other build options, including house extensions, please take a look at our Essential Guide To Extending Your Living Space, which can be downloaded by clicking here.