Replacement Plots Explained
Today over half of all self-builders are choosing to knock down and start again. Mark Stevenson looks at what’s involved — and explains why it might be the right route for your project
Could knocking down an existing property provide you with the perfect plot for your dream home? Self-build expert Mark Stevenson reveals everything you need to consider in his in-depth guide
All houses are just temporary occupants of building plots. When you think about land finding in that sense, all of a sudden a world of opportunity awaits you. These days, just over half of all self-builds in the UK take place as a result of an existing home being demolished*. While to many people buying a property only to destroy the bricks and mortar feels like anathema, building a new home by replacing an old one brings with it many unexpected benefits. So how do you approach the idea of replacing and rebuilding, and how do you know whether the house you have just seen (or perhaps have even owned for years) is suitable for the wrecking ball?
Viability is the key to identifying whether a plot has potential for redevelopment — while building your dream home isn’t always a profit-making exercise, making sure the numbers stack up is paramount. The idea is to work out if the project is ‘profitable’ and thereby ‘viable’, and therefore worthy of your time to redevelop it. Unfortunately this is where many uninformed self-builders come unstuck — placing passion before pounds! My advice when it comes to replacement plots is to think like a developer, do your research and always understand the financial consequences of taking on a project. In the broad sense, calculating viability isn’t complicated; it’s a case of working backwards from what the plot could support, establishing the end value and then deducting the total cost of developing the project and buying the property in the first place. What’s left is ‘profit’, or in other words ‘equity’, generated by your efforts to build a replacement
home. Ideally only consider projects that are in the black once completed, unless you’re happy to lose money. The basic calculation is: profit (equity) = end value – build costs – purchase costs
While the calculation looks fairly straightforward, if you’re looking for an accurate, reliable answer, you must do your homework and account for all costs involved. You’ll need to work out what kind of house the plot will support, how much it will cost to build and how much it will be worth when finished. The devil is in the detail and some of the more important considerations are explained here.
architectural design and planning permission The end value of the rebuilt house will undoubtedly depend on its architectural design, and failure to secure planning permission will stop any project dead in its tracks. The trouble with design is that it’s subjective and ideally, as you are trying to maximise value to make a replacement project viable, you need to create a design that demands the best price while securing the green light from the local planning authority (LPa). This can feel a bit like playing a high-stakes game, and failure to get it right could have significant consequences.
all replacement projects are subject to scrutiny by the LPa and planning policy will affect your development plans. The good news is that when replacing an existing home, the principal of residential development is already established and therefore details such as design, scale, siting and access will just need to be considered. Increasing the size of the replacement property will improve financial viability but will be governed by strict policy guidelines. Typically, most LPas will allow a replacement dwelling to be up to 30% larger than the existing house, but some will take a more pragmatic approach and consider a wider perspective of the proposed design and the local context.
Planning policy does favour innovative design, although local vernacular styles, architectural features and street scenes will all influence what’s possible. When developing design ideas, take cues from the surrounding buildings and think about how your proposal will impact or ideally ‘fit into’ the local street scene. designs that are overbearing, taller than adjacent properties and result in loss of amenity to neighbours are likely to be frowned upon and probably refused permission.
When it comes to architecture and planning, try not to design a house that is so individual only you’ll like it (as limited demand will adversely affect value).
It may be worth checking your proposals with the planning department by holding a ‘pre-app’ meeting, but be cautious with this as the advice given is not legally binding on the local authority. In my experience, when trying to work out the impact of planning policy and what might be permissible, always consult a planning professional.
Debbie and Peter Curnow-Ford spent over a year plot hunting before they found a bungalow on 2.6 acre site in Hampshire. The couple gained approval, via appeal, to knock down and build a new house designed by Potton. The plot/bungalow was £850,000 (in 2011), with a build cost (including demolition, drive and landscaping) of £715,000. The house is valued at £2.1million, leaving a healthy amount of equity for the couple.
BEFORE * Custom and self Build RepoRt, HomeBuilding and Renovating
BEFORE This small, tired 1950s bungalow in Kent (above), cost £300,000, with construction costs totalling £290,000. OB Architecture designed the two-storey replacement (top), which is 40% larger than the original. The new house is valued at £1.1million-plus — meaning the self-builders enjoyed a handsome ‘profit’.