SELF-building boom
Many dream of creating their home. Here’s how to join the...
THE coming weekend will see tens of thousands of people – and thousands of exhibitors – descend on Sandown Park in Surrey for what is set to be a record-breaking Homebuilding and Renovating Show.
As well as workshops and advice on everything from finance to fitting out, there will be help for self-builders searching for the perfect plot for their grand home design.
Those amateur builders who snap up a plot at the show will be in good company. Last year, a record 1,100 people a month built their own properties or restored derelict buildings, often inspired by TV shows such as Grand Designs and The Restoration Man.
Michael Holmes is chairman of the National Custom and SelfBuild Association. He says: ‘We have seen the number of selfbuild completions rise every year for the past five years – and we are confident the figure will rise again this year.’
The experts say self-builders do not need any special skills to join the home-building revolution. Rachel Pyne, of the specialist self-build renovation mortgage broker BuildStore, says: ‘The good news is that self-builders come from all walks of life, are of all ages and really do not need any background in construction.’
Nor do you need to buy an empty plot and design a new home from scratch to join the party. Pyne says an equally fast-growing band of people are choosing to renovate derelict or non-residential buildings and transform them into dream homes.
Here are the key challenges for every type of amateur builder.
DO THE MATHS
THE key reason for putting on a hard hat and building your own home from scratch is that you get the exact property you want – potentially future-proofed with a ‘granny annexe’ or self-contained rooms for returning grown-up children.
But self-build can also get you a house substantially cheaper than an existing home. The savings can start on day one as your stamp duty bill should be low as tax is due only on the cost of the land, not the value of a completed house. Other savings can be built in along the way. You can reclaim VAT on much of your materials, giving you 20 per cent back on allowable costs.
BuildStore’s Pyne says completed homes can be valued at 20 per cent higher than the land and construction costs, so you can end up owning more for less. If you are not funding your build through savings or the proceeds of a house sale then getting a mortgage will be a challenge. Only around a dozen lenders offer self-build loans and Halifax will issue them only through brokers rather than via its branches. Other smaller players include building societies Ecology, Saffron and Scottish. Virgin Money is due to join the market this summer.
Cashflow can be tricky, so you need a war chest from the start. Most lenders release cash only after certain milestones are passed. They send surveyors to check that the foundations are down, for example, or the roof is on, before paying out for that stage of the job.
On every deal interest rates will be higher than mainstream best-buy rates for existing homes. Some two-year fixes and variable rate deals for self-builders start at 4.5 per cent but most come in at more than 5 per cent.
Fortunately, as you are not withdrawing the full amount on day one, your initial monthly payments will be low. Affordability is calculated by looking at your full financial situation, as with any other mortgage.
THE CASE FOR RENOVATION
EXPERTS such as Restoration Man host George Clarke say renovators are in the game for different reasons – for example, they have spotted a hidden gem of a derelict property and are determined to live there. They benefit from the same stamp duty and VAT benefits as self-builders. But they can face bigger challenges getting a mortgage. In most cases they will fall between two stools. Lenders will not give them a self-build loan as they are not starting from scratch on an empty plot, but they will not give them a traditional loan as the derelict building is not habitable from day one.
A smaller selection of lenders, including BuildStore and building societies such as Melton and Ecology, can help. The Ecology considers conversions of derelict barns, cow sheds, garages, windmills, churches and pubs.
Interest rates on these loans tend to be higher, with two-year fixes and variable rates starting at about 5.4 per cent. For information on this weekend’s show go to homebuildingshow.co.uk.
FINAL CHECKLIST
DO register with free plot search sites rather than paying to find land. Look at buildstore.co.uk and register at custombuildhomes. co.uk to get news of freshly released land from councils.
DO NOT be duped into buying cheap land. Sellers who know plots will not get planning permission will try to offload them to the unwary.
DO consider a ‘kit’ house from the likes of Potton of Scandia Hus. They can be customised and save thousands of pounds in architects’ fees.
DO NOT ignore ‘custom building’, where you get a plot on a large patch of land set aside for self-builders. The cost of connecting to utilities is shared.