Finding a self-build plot
It’s the starting point to any self-build dream. Here’s what to consider when plot hunting
You may be fortunate enough to have a plot already at your disposal — a large side garden, for instance, that could accommodate a new home. However, for many would-be selfbuilders, the process begins with finding a suitable building plot.
It’s important to approach plotfinding with an open mind. Rarely does a flat plot of land, adjacent to open countryside in a picture-postcode village, present itself (without a high price tag to suit, of course). Self-build plots come in all shapes and sizes. Typical plot ‘types’ include:
Garden plots.
As the name suggests, a garden plot may be a large side or front garden on which the owner has sought planning permission to build a new house.
lGreenfield plots
are areas of previously undeveloped land. A greenfield site is often a parcel of land in an urban area or village that occupies a ‘gap’ in the streetscape.
lllBrownfield land.
This term applies to land that has had a previous planning use that may have ceased. It could be a redundant warehouse or an old garage, for instance. Challenges could include contamination, which can be costly, which should be reflected in the price.
Increasingly, local authorities and private companies are bringing plots to the market with services such as roads and sewers already taken care of. These are serviced plots and in many cases service supplies will be connected into the plots. The developer of the land may then offer the plots for custom build homes with varying levels of design involvement from the prospective homeowner. This can be a great way to get a bespoke home, particularly if you hope to be relatively hands-off, but the rub is that there is generally a more restricted design process. When looking for a plot on which to build your dream home, don’t limit your search to looking for land. In high-value areas in particular, such as the South East – where this approach can perhaps make more financial sense – widen your search to include dated houses and bungalows, which could be prime candidates for replacement. The key is to treat every home as just a temporary occupant of a building plot — once you get into this mindset, opportunities begin to present themselves.
lServiced plots. Replacement builds. What makes land a building plot?
A piece of land is not a building plot until planning permission is granted. Access
FUNDING YOUR BUILD
You’ll need access to money to buy a building plot, to pay for professional services such as architectural designers’ fees and any site surveys required, and to fund the build itself. How you find this money will, of course, depend on your financial situation. It may come from your savings, equity in your existing home, a self-build mortgage or, most likely, a combination of all three.
Surprisingly few high street banks provide formal facilities for self-build finance, so you’ll probably need to approach a specialist self-build mortgage provider. A self-build mortgage is tailored towards the way you pay for a self-build project — with money released in several stages, rather than all at once (as it would be if you were buying a house). Finance will be released at key stages as the build progresses, for example when the foundations are laid or when the building is made weathertight.
There are two main types of stage release mortgage. The first is an arrears stage payment mortgage, which see funds released as work is completed. The second is an advance stage payment mortgage, which pays out before each stage of the build begins. The latter has obvious advantages in terms of assisting cash flow and is generally better suited to those who do not have large pots of savings with which to fund their build as it progresses.
Some, but not all, self-build lenders are willing to lend on plot purchases too. Rates of interest for self-build mortgages are typically higher than those that are currently available for a standard house purchase or remortgage, and the arrangement fees vary significantly from lender to lender, so be sure to shop around. Once the property is habitable, some lenders allow the borrower to switch to a lower rate of interest.
The amount you can borrow will depend on similar factors to those that would govern your limit on a standard house mortgage; in most cases these will include an affordability assessment, income multipliers and LTV (loan to value ratio — a measure of lending risk). Lending policies change regularly, but lenders may, for example, offer to provide funding for up to 85% of the value of the building project. In order to progress your application you’ll likely need to provide plans and a breakdown of the potential build cost.
Funding your project may require a specialist selfbuild mortgage…
Remember to factor in the following costs...
In addition to the plot and total build cost, there are other costs associated with building a home that need to be accounted for, including those associated with purchasing the plot (legal fees and stamp duty), a topographical survey, any surveys you need for planning purposes (such as ecological surveys), design fees, planning fees and the cost to create plans for Building Regulations purposes. You’ll also need to purchase self-build insurance as soon as you buy your plot, and it’s a good idea to get a warranty, too. Another common ‘hidden’ cost is the price of bringing services like electricity, water and mains gas to site. These extras can add up fast, so stay on top of them.