We took the Grand Designs gamble... and it’s paying off
Red tape slashed. Councils ordered to find you land. And profits of up to 30 pc. Is now the ideal time to build your dream home?
DOZENS of hopeful homeowners are crowded around a stall, excitedly clutching hand- drawn plans for their dream properties.
A team of experienced builders is hosting an ‘ask the expert’ session and those queuing are desperate for help getting projects off the ground.
They are among 30,000 budding DIY housebuilders who have descended on The Homebuilding & Renovating Show at Birmingham’s National Exhibition Centre.
Inspired by hit TV shows such as Kevin McCloud’s Grand Designs, they are hoping to pursue the dream of building their own home.
The atmosphere is buzzing. There are a handful of families and young couples, but most visitors are in their 50s and 60s.
Hundreds of stalls are selling Scandinavian and Alpine lodge-style homes, design and building services and renewable energy heating.
There are workshops on everything from finding land and applying for planning to selecting and dealing with tradesmen.
Designing and building your own home is a booming business, particularly among those near retirement. Last year, so-called selfbuilders made around 15,000 homes.
That is expected to soar following the launch of the Government’s Right to Build register in April 2016, which means councils must relinquish land for residents or groups of locals to build on within three years.
And some are finding it is better value to build than to buy as you don’t add to a developer’s profits.
Experts claim that once finished, a self-build property is typically worth 25 pc more than it cost to build.
Rachel Pyne, client services director at self-build and financial advisers Buildstore, says: ‘It depends on the location, specification and how you go about building your home, but once completed it is typically worth between 15 pc and 30 pc more than it cost you to build.’
Here, Money Mail investigates how homeowners can become DIY housebuilders — and whether the rewards are worth the risk or the hassle.
HOW ARE YOU GOING TO PAY FOR IT?
FIRST work out what you can afford to spend. Most DIY builders use cash to pay for their building project, which they have typically made from a previous house sale.
But around 40 pc of self-builders still fund their new home with a mortgage, according to Buildstore.
It is important to speak to an adviser who specialises in self-build mortgages early on to check you have a large enough deposit.
Borrowers can take out a self-build mortgage with a 5 pc deposit but the choice of deals is limited. The widest range of mortgages is available to those with at least a 15 pc deposit.
Around 25 lenders, including Halifax, offer self-build mortgages, with rates from 3.99 pc to 5.24 pc and a mortgage term of 25 years.
You receive the loan in four or five phases at key stages of the build — rather than in a lump sum.
Once the house is built, your lender should let you switch to a traditional mortgage, penalty-free.
Another way to raise the money to build your dream house is to release cash from your existing home.
You can do this by taking out a short-term loan secured against the property, known as a bridging loan.
You do not make monthly payments, the interest is rolled up and repaid when you sell the house.
Over-55s could also use an equity
release mortgage to access the cash in their home — again no monthly repayments, the debt is repaid when you die or go into care. If you raise funds this way ensure your lender will let you transfer or port’ your loan to your new home once it’s completed.
FINDING THE LAND IS JUST THE START . . .
YOUR budget has to cover the cost of land, building work, legal fees, any loan repayments and stamp duty.
Self-builders get a better deal on stamp duty than those buying a ready-built home because tax is only payable on the cost of the land, not the value of the finished project.
Register with local estate agents and keep in contact so you are in their minds if a plot comes up.
And look into local and national land auctions. Local auctions tend to attract a lot of interest in a handful of plots. But self- build expert Jason Orme says buyers should not be put off. ‘A lot of people go along out of curiosity but hardly anyone is in a position to buy a plot there and then.
‘You need to arrange finances and a valuation in advance so you can put your deposit down on the day.’
National auctions are typically held in arenas such as football stadiums and run by large auction houses.
Mr Orme says: ‘There are hundreds of plots up for sale, and they can still be rich pickings. Do your homework before you go. Get the catalogue and find which plots are in your area.’
Online search tools such as PlotBrowser, Plotfinder.net, Plot Search and The Land Bank Partnership collectively list thousands of plots and are free to sign up to.
Add your name to your local authority’s Right to Build register.
Under English law, councils have to keep a register of anyone who wants a plot of land to build their own home. Glasgow also has a version of the scheme. By registering your interest the local authority has to make land in your area available.
Since the register was launched in 2016, 40,000 people have signed up, and by October, 18,000 planning permissions should have been granted.
One way to save money on your plot is to find it yourself — walking around the area you want to live in is a good way to identify one. Look for odd- shaped plots on the edges of housing estates that a developer was unable to use, or push a note through a homeowner’s door if you notice unused land around their home.
WAYS TO DO IT — THE DECISION IS YOURS
The traditional route to building your own home is to employ an architect to design it, then builders are invited to bid for your business.
You can employ a master builder to lead and manage the project and hire tradesmen, or you can manage the build yourself and pick your own team. It usually costs between £1,300 and £1,500 per square metre (sq m).
First- time builders can buy a custom-build package from companies specialising in bespoke homes.
They build the house, complete with a kitchen and bathrooms. This costs around £2,000 per sq m. Or go for a basic package, where the company designs the house and builds a watertight shell but you do the rest. Cost? About £1,100 per sq m.
Buying a home on a custom-build estate is another option. it can be easier as estates already have access to water, power and phone lines.
After buying a plot, you pick the size and design of the house, but it must comply with design guidelines for the estate.
It’s less likely to generate the big savings from previous methods, but you still get a home built for you that reflects how you want to live.
. . . BUT DON’T FORGET THE RISKS
BUILDING a house is a large and expensive project that should not be undertaken lightly.
Andrew Baddeley-Chappell, chief executive of trade body National Custom Self Build Association, says the greatest uncertainty with selfbuilding is what lies beneath the ground and work needed to lay the foundations. This stage of the build can throw up hidden costs and complexities. he also advises DIY builders to beware of cheap land.
he says: ‘If it looks too good to be true, it probably is. Remember when you are building that complexity adds costs and increases the risks of unexpected challenges. The more you can do yourself, the more money you save, but only if you are competent enough to do a good job.’
Whatever your involvement, be prepared for the number of decisions you will have to make and do not be rushed into making rash choices.
You should take out site insurance as soon as you own the land. It includes public liability insurance, to cover legal action and compensation claims if someone is injured on your land. It also covers if machinery or materials are stolen. A standard policy is about £700 for 18 months.
Picking a solicitor can be challenging because few are familiar with self-build homes. There is no single register of specialist solicitors so before instructing someone to act for you, ask what experience they have. And the solicitor must be on your mortgage lender’s panel.