Self build vs Contractor - ball park saving?

[Clockers]

Hi folks,

 

We're about to start the complete renovation, remodelling and extension of our 1800's terraced workers cottage in North London and are struggling to decide whether to manage the project ourselves or hire in a building company to manage all or part (build the shell) of the build. We've used an architect throughout the whole process to date and plan to keep them on throughout the build whatever we do. The problem is that the quotes that have come back from their tender process for the full build are far more than we can afford. The key figure we're trying to understand is how much can you actually save by managing it all yourself, using local labourers and own labour, hiring in trades, avoiding VAT where possible etc? All of my research to date has been completely inconclusive on this so hoping the community can help. 

 

We can enlist the help of a local builder with 30 experience (he doesn't have a big team to call on but knows some trades and is incredibly resourceful and helpful)

We're generally up for a challenge and have experience of renovations (not structural) but have a young child who one of us will need to look after full time (most likely my wife). I'm working full time currently and am yet to have a conversation about dropping hours or working flexibly in order to manage the build.

We're going to move out for the duration to a flat nearby so luckily won't have to live through it.

 

We now need to think about our options: 

- should we scale it back (either take expensive items like glass or internal structural changes out) - not ideal as we really like the scheme and don't want to have to go back to planning (took 18 months to get permission)

- Should we phase it by getting a main contractor to get us to a water tight shell then manage the rest ourselves?

- Should I just stay working full time and try and borrow more money to get it all done, to spec by a main building contractor?

- Should we self build? There's obvious risks involved - we watch enough grand designs to know what can go wrong. How much would we save? Could it be the most rewarding experience of a lifetime?

 

Bit of detail on the build itself...

Upstairs - Adding a bedroom and bathroom while removing a thick external wall, moving the staircase and completely redecorating.

Downstairs - Removing a lot of walls to create open plan kitchen/living/dining, extending out the back to add large dining room, utility and bathroom. complete redecoration.

Also rewiring and re-plumbing throughout with the desired finish to a medium spec.

For the sake of this discussion lets say the average tendered quote is £200K inc materials, not including VAT or the % increase in architect fees for additional build cost.

 

I'm sure many of you have been through this process before, so really keen to hear your experience :-)

 

Cheers

Clockers

[Mr Punter]

If you have a decent job I would not advise that you give it up or reduce your hours. Better to improve your position and gain promotion / increase income.

 

I assume you have looked at what you can get for an extra £250k? Have you done numbers on whether the work will increase the house value by at least what you are spending?

 

I don't know why the architect needs to be involved throughout and paying a percentage may be wasting your money.

 

Maybe post the plans and invite comments.  There may be areas where you can save lots of money and it will make little difference to the end product.

 

WRT planning consent unless you make changes to the externals it is unlikely that you will need to go back to them and it certainly would not be 18 months.

[ToughButterCup]

40 minutes ago, Clockers said:

[...]

- Should I just stay working full time and try and borrow more money to get it all done, to spec by a main building contractor?

- Should we self build?

[...]

 

Do what you're good at. Let them do what they are good at. 

Watch them  like a hawk. Every single day without fail

[Big Jimbo]

2 minutes ago, AnonymousBosch said:

 

Do what you're good at. Let them do what they are good at. 

Watch them  like a hawk. Every single day without fail

Defo +1 And either have the ability to challenge how they are doing things, or perhaps pay the local bloke you know a few bob in cash to pop around every few days to check that what has been done is up to standard. Dump the Architect. The local builder would be a lot cheaper and do a better job.

[Bitpipe]

A few thoughts...

 

As this is a renovation / extension of a dwelling that you're occupying (vs a demolish to ground & re-build or refurb of previously unoccupied building) then you have no scope to reduce VAT, aside from using trades that are not VAT registered, which in London I think is unlikely.

 

So, you hire a turnkey contractor who will be 'one throat to choke' and if you agree a fixed price there should be low risk in this approach, however as you have seen - these people have overheads to meet, margin to generate and you are paying for it. They will also not expend significant effort to save you money and any savings they do make go in their pocket, not yours.

 

Next option is to be the PM and sub work out to smaller trades who will have less overhead. You increase the risk but now you pocket the savings. If you're buying the materials, you can scour and scrounge for the best price. You need to visit the site at least a few times a week, more if you're on the hook to open / lock up. With some juggling you can still do the day job and dedicate your evenings to planning ahead, ordering materials and  reviewing progress. You will need to take the odd call during the day.

 

Last option is to ditch the day job and pitch in - unless you've got valuable practical skills to offer, you're better off working.

 

We did #2 and delivered the project under budget. It helped that we lived on site (caravan, family of 4 - painful but saved £££) and I could mostly work from home - even then, I mostly left the trades to it.

 

Agree that unless they are PMing the job, ditch the architect (or agree a scheme where you can get clarification on demand).

 

It's best to use a single contractor for the structural elements, avoids gaps in who is responsible for what. Once that's done you can contract your own roofing, windows, electrics, plumbing, plastering and joinery plus other finishing trades.

 

Some will have preferred suppliers that they like to use (especially plumbers & sparks) others will be less fussed as long as materials are on site on time.

 

It's not easy but it's not impossible either.

 

BTW, you are already self building, it's a very slidey scale

[Alex C]

+1 to all of the advice above. For this kind of job an architect should not be required. Make sure you get any details from the architect before you give them the shove. You could even pay them to produce an accurate schedule of works for people to quote on. Even if you keep the architect on you are unlikely to be paying them enough for them to bother putting much effort into your job. Why cant your builder with 30 years experience be the main contractor? 

[Clockers]

Thanks for all the replies so far, very helpful indeed. To clarify a few things:

 

1 hour ago, Alex C said:

Why cant your builder with 30 years experience be the main contractor? 

I don't think he wants the responsibility of lining up all the trades, taking on all the responsibility etc. He just wants to get on with things and would be happy to direct traffic on site and act as a kind of foreman.

 

2 hours ago, Bitpipe said:

then you have no scope to reduce VAT, aside from using trades that are not VAT registered, which in London I think is unlikely.

We've found non VAT registered trades in the past, for example a brilliant gas engineer who I'd look to get hire again. We're on the outskirts of North London, just inside the M25, so hoping there are more of them out our way.

 

2 hours ago, Bitpipe said:

You need to visit the site at least a few times a week, more if you're on the hook to open / lock up. With some juggling you can still do the day job and dedicate your evenings to planning ahead, ordering materials and  reviewing progress. You will need to take the odd call during the day.

We'd assumed that to PM the job we'd need to be much more involved, i.e. I'd need to quit my job or seriously cut down hours. From the sounds of your advice and of others, that may not be the case. The flat that we're renting is 3 minutes walk away, so I can drop in on the way to/from work if required, and there may be scope to work from home, but this would not be on a regular basis.

 

2 hours ago, Bitpipe said:

Last option is to ditch the day job and pitch in - unless you've got valuable practical skills to offer, you're better off working.

As a frustrated white collar worker who's always dreamed of building a house, this is highly appealing. My job isn't particularly interesting and I think i could get another one pretty quickly after the build is completed (bit risky though). Saying that, the limit of my skills would be as an unskilled labourer and tea/coffee maker so other than as PM, my value add is limited.

 

3 hours ago, Mr Punter said:

I assume you have looked at what you can get for an extra £250k? Have you done numbers on whether the work will increase the house value by at least what you are spending?

Yes, we've looked in the area, and what we'll have when it's finished is better than similar priced properties and will be really unique. We're not 100% sure the value of the house would increase by £250K, but it wouldn't be miles above or below that mark and we're planning to live there for a long time.

 

3 hours ago, Mr Punter said:

I don't know why the architect needs to be involved throughout and paying a percentage may be wasting your money.

There seems to be a consistent opinion, just from the responses so far, that keeping the architects will be a waste. We'll be having a meeting with them soon to discuss how they would support us through self-build, so if anyone can advise us on what we should be pushing for, or expecting from them, please shout. We've enjoyed working with them so far, and they've come up with a great scheme and lots of great design ideas, so not ready to kick them off yet, but want to get value from them at the same time.

 

Cheers

 

[Ferdinand]

Welcome.

 

Can you have this treated as a career sabbatical?

[Bitpipe]

17 minutes ago, Clockers said:

We've found non VAT registered trades in the past, for example a brilliant gas engineer who I'd look to get hire again. We're on the outskirts of North London, just inside the M25, so hoping there are more of them out our way.

 

I don't think he wants the responsibility of lining up all the trades, taking on all the responsibility etc. He just wants to get on with things and would be happy to direct traffic on site and act as a kind of foreman.

 

We'd assumed that to PM the job we'd need to be much more involved, i.e. I'd need to quit my job or seriously cut down hours. From the sounds of your advice and of others, that may not be the case. The flat that we're renting is 3 minutes walk away, so I can drop in on the way to/from work if required, and there may be scope to work from home, but this would not be on a regular basis.

 

Remember that VAT registration is based on declared annual turnover (70k ish?) so anyone who is under that threshold is probably not that busy, especially at London rates.

 

If you have someone who will open / close the site and take deliveries etc then you've solved one of the main logistical issues of working without a main contractor.

 

You really don't need to be that involved while the work is being done, your job is tee up the next set of work and make sure all the materials are there at a price that works for you.

[Clockers]

5 minutes ago, Ferdinand said:

Can you have this treated as a career sabbatical?

 

That's the dream... not sure if my company would go for it though.

[Alex C]

As you live near by it would be perfectly manageable for you to act as main contractor, especially if you employ your experienced builder with a good address book. Working from home or flexible hours would make a big difference but i think there is no point you being labourer as it is not a good use of your time or money. If your architect has produced a set of details and a schedule of works his remit would not be more than to check quality of work and have a site meeting every fortnight. He may be expecting to sign off work done so you can agree how much to pay your builder. Speak to your builder about how he would want to be paid as you may not need this if the job is divided up into chunks with a defined end to them.. The risk is always that you can over pay your builder for work completed and then they bugger off or go bust. The main issue for you is that trades will not be as guaranteed to turn up on time if they are employed by you rather than a main contractor so your builder may be left hanging with gaps in the schedule.

[nod]

Be careful of non vat registered trades Unless they work for a company and are working on your job Nights and weekends  It’s very easy to hit the vat threshold 

If they are working as a builder and not declaring most of there work 

You will have no guarantee

 

[Thedreamer]

I doubt you would need to give up the day job if going down the project manager route.

 

Most of your work will be in the design, finance and getting the remaining paper out the way.

 

Big advantage if your 3 minutes away.

 

I'm project managing my self build on Skye. Usually when there is activity on site the routine is:

 

Go down in the morning speak with the various contractors and then in the evening check the work/research next step. During your lunch hour, order materials/pay bills.

 

Book annual leave for the landmark days and when all hands are needed on desk (fitting windows etc)

 

Have you consider using a surveyor to carry out inspections and provide certificates to your lender?

 

Might be harder in London, but if you can find a good contractor you can trust, they might have other trades they work with regularly. Your be working on a contractor by contractor basis but you can create synergies if your contractors talk to each other, know the standard of each others work etc 

[jamieled]

6 hours ago, Clockers said:

 

That's the dream... not sure if my company would go for it though.

I'm doing mine that way. If you don't ask you don't get!