contingency....how much did you use / m2

[joe90]

4 minutes ago, SteamyTea said:

You could get that old car working properly.

 

Nah, I spent it on the conservatory, Gentry won’t take much, started today working out how I can remove the clutch slave cylinder without dropping the engine out ?.

[SteamyTea]

2 minutes ago, joe90 said:

how I can remove the clutch slave cylinder without dropping the engine out

Gasoline and matches, coupled with good insurance.

[ProDave]

9 minutes ago, joe90 said:

 

Nah, I spent it on the conservatory, Gentry won’t take much, started today working out how I can remove the clutch slave cylinder without dropping the engine out ?.

If it's like my Landy slave, you ignore the leaks (what's another fluid drip from a landrover) and top up the reservoir regularly.

 

Back to contingency.  I can understand that concept if you have to borrow money so you work out how much you need and add a contingency and that is what you try and borrow.

 

But ours was in theory being funded by assets, so we have what we have and are not borrowing. So the build will cost what it costs with just the desire to not to waste money and achieve value.  So we set out without an accurate budget and no concept of contingency and that is how it is still.

 

Remember the old saying, cheap, good and fast, you can only have two.  We have opted for cheap and good and now in the 5th year.

 

[joe90]

9 minutes ago, ProDave said:

If it's like my Landy slave, you ignore the leaks (what's another fluid drip from a landrover) and top up the reservoir regularly.

 

Its worse than that, clutch won’t even work, and the master cylinder is full!!!, it may be the master that’s faulty but I plan to recon them both.

[SuperJohnG]

11 hours ago, JSHarris said:

I'd planned on our build costing ~£1200/m²,

 

We ended up coming in at £1380/m², so about 15% over budget, 

@JSHarris so 1200 budgeted but a knowing and controlled increase for upgraded finishes rather than surprises

 

10 hours ago, Redoctober said:

 

Yes, this was our approach too. We had decided what type of finish we were going for and priced it all up. Everything was agreed before a spade was put into the ground.

As long as the collective prices were within our available funds so to speak we pressed ahead. Yes there were a couple of unknowns or price differentials but nothing we couldn't cater for within our overall budget. 

That said, if things were to get out of control [ which they didn't] then we would have been able to cut back on the finishes etc to claw back the overspends etc. 

Once were out of the ground, I felt fairly confident that the budgets planned for were going to be pretty much as expected, and they were.

@Christine Walker and @Redoctober I seems to make much better sense to do this, i just wasn't quite sure how to allow for the labour which seems such a large chuck of unknown. albeit plumbing I will do myself along with MVHR, ASHP. 

 

9 hours ago, Thedreamer said:

You also mentioned 12 months, personally as a young self builder I would hate that. Everybody circumstances are different but for us, even before we stuck a shovel in the ground, we converted my wife's parents loft in to a flat and once this was done, I was no longer ever stressed about finance as I was now saving a lot of money each month and it was just a matter of time. We wiped out our savings to do this but we had to take a step back and learn lessons to achieve a bigger goal.

@Thedreamer For us, we plan on moving back in to our let flat but we have two young kids and albeit better than a caravan..its not somewhere i want to spend two years. Not for a point of rushing but actually to limit the interest on the loan from buildstore. In saying that it will be fairly limited to £150k to complete build.  Originally we wanted to stay in current house but selling it frees up £140k...so better that than paying heavy interest. 

 

9 hours ago, Thedreamer said:

You should also not get to caught in the m2, you could build 150m home for £1000 m2 and it could be worth less. If it's your forever home, value is however less important. 

@Thedreamer m2 I suppose doesn't matter to me. However the overall planning of a budget at early stages it is required to quantify what you can and cant do and an estimate of the house size you can build to allow you to start that plan. Ultimately final value to us doesn't matter as we will build this as our forever home but still I would like it to be worth more than it costs me to build it! 

 

9 hours ago, Thedreamer said:

Also importantly, cash is king. Don't just consider I have build cost of X with %Y contingency and this has been funded by x,y,z  are you going to be able to keep cash flowing during the build. Prime example being do your calculations for materials purchased by yourself included VAT? If you plan to buy a lot of materials you probably will have a lower final build cost but you might be looking at a creeping £15,000 VAT balance to finance till the HMRC repay you.

@ThedreamerYes cashflow is a major factor which I am planning for , but ultimately it doesn't matter to the cost per m^2 budget value (with the exception of avoiding paying VAT on goods by getting through builder whilst incurring a premium for said service). so it doesmatter...but not relevant to my query if we like... 

 

8 hours ago, AliMcLeod said:

You'll also get mixed results with some including build only, excluding founds, others will include founds, other will include plot cost, others will include professional fees. So, you are rarely comparing like with like.

@AliMcLeodI'm hoping that most people do it the way i do it. Really in my mind only build from bare ground to a completed house should be included which includes all material and labour Plot, services, professional fees etc should be excluded. I suppose there should be notes on foundations complexities and finish levels as they are major factors but that should help with reasons for figures that are well off the median line.

 

8 hours ago, AliMcLeod said:

You mention you have a 4 acre plot - have you validated that services are available to where you want the house? That can be a big cost sink.

@AliMcLeodYes - thats already done along with all the planning for trenching etc, along with sewage treatment plant, road etc. it's a high cost for me at around 40-50k to get everything ready to start works but it's known costs which can allows me to mitigate them from the outset. 

 

7 hours ago, SteamyTea said:

Isn't the idea of a contingency to just get you out of a very unexpected hole.  If, say you are working to £1200/m², and working to a m² price is only valid once the house is finished, your 5, 10, 25% contingency should not affect the overall cost greatly.

If it does, then your costing was way out to start with.

Also, does anyone account for the VAT rebate?

@SteamyTea i consider m^2 prices to be once you have had your vat back. A final point of what it actually costs you. It shouldn't affect the price but if the unforseen happens then what happened was my query But realistically...if you do you homework and plan appropriately then theoretically you will never use that contingency. 

 

6 hours ago, redtop said:

that's my list anyhow:- groundworks, services, foundations and then its manageable and not scary risk and you will be able to get a proper feel for the final cost. As an aside for our 160m2 house we have spent 27k on groundworks, 26k on foundations, 22K on steel to form posts / substructure and 8k on services. 

@redtop Lord have mercy........were you building on a cliff?! I have a large open flat plot..albeit you can never be complacent. I am hoping the risk is minimised.......picture attached. 

 

 

I can't tell you how long it's taken me to write this reply. But thanks so far for all the input. 

 

[Jeremy Harris]

8 hours ago, SuperJohnG said:

@JSHarris so 1200 budgeted but a knowing and controlled increase for upgraded finishes rather than surprises

 

 

Not quite.  The cause of the cost over run was initially the nearly a year of delay caused by the borehole problems, so no water on site.  That meant we paid out a fair bit more of the planned budget in finance cost, which then meant me doing more of the work myself to save labour cost, and that in turn took a lot longer which meant spending even more on finance.  It got to the point towards the end where the only materials we could afford were from whatever I saved from my pension each month.  Someone else has mentioned that cash flow is critical, and it really was in our case.  We had an asset (our old house)  plus some locked up savings we couldn't get at, plus the VAT that we knew we'd get back at the end (about £10k or so), but they aren't much help when you're trying to get the house finished.  As soon as we were finished and had the VAT back, together with having sold our old house, we were fine, much lower monthly outgoings and our savings pot replenished.

[recoveringbuilder]

8 hours ago, SuperJohnG said:

Christine Walker and @Redoctober I seems to make much better sense to do this, i just wasn't quite sure how to allow for the labour which seems such a large chuck of unknown. albeit plumbing I will do myself along with MVHR

We had all labour quotes in some months before starting as well so we knew exactly what we would be paying for labour 

[Ferdinand]

14 hours ago, SuperJohnG said:

@Thedreamer For us, we plan on moving back in to our let flat but we have two young kids and albeit better than a caravan..its not somewhere i want to spend two years. Not for a point of rushing but actually to limit the interest on the loan from buildstore. In saying that it will be fairly limited to £150k to complete build.  Originally we wanted to stay in current house but selling it frees up £140k...so better that than paying heavy interest. 

 

You seem to have thought things through well but have not mentioned the option of funding off the back of your existing properties.

 

(Forgive me if you have considered this option.)

 

As I see, over 18 months (multiply up as reqd), for 140k you would be paying:

 

For self-build mortgage at 5%: 10500 interest reduced if they charge interest only on money you have drawn down, plus arrangement and other fees etc.

 

For living in the BTL: 5-10k per year rent lost = 7k to 14k.

 

If you can get mortgage finance on your existing, currently you can get a 2 year fix at about 1.5% plus fees (of 500-1000) at about 80% LTV, and a BTL mortgage at perhaps about 1% more. If you can swing it you would be relatively up by at least 10k+, and not living in a cramped environment. You would be able to borrow against the BTL with relatively little trouble (subject to criteria), but the existing home may be best searched through a broker.

 

Ferdinand

 

 

 

[SuperJohnG]

35 minutes ago, Ferdinand said:

 

You seem to have thought things through well but have not mentioned the option of funding off the back of your existing properties.

 

(Forgive me if you have considered this option.)

 

As I see, over 18 months (multiply up as reqd), for 140k you would be paying:

 

For self-build mortgage at 5%: 10500 interest reduced if they charge interest only on money you have drawn down, plus arrangement and other fees etc.

 

For living in the BTL: 5-10k per year rent lost = 7k to 14k.

 

If you can get mortgage finance on your existing, currently you can get a 2 year fix at about 1.5% plus fees (of 500-1000) at about 80% LTV, and a BTL mortgage at perhaps about 1% more. If you can swing it you would be relatively up by at least 10k+, and not living in a cramped environment. You would be able to borrow against the BTL with relatively little trouble (subject to criteria), but the existing home may be best searched through a broker.

 

@Ferdinand 

 

It is still an area where i need to focus much more attention and properly do all the finance scenarios and calculations so we can see the impact. 

 

But loosely...

 

Current house: £150k value, no mortgage.

Flat: £90k mortgage (actual value £90k or less.....an unfortunate casualty of the 2008 recession. Originally bought for £120k) 

 

Total development cost: £400-420k

Required finance to do self build: £300k. (not including any properties above)

 

Hence, I was originally looking at staying in current home and taking a full self build mortgage for the full amount (£300k). It would look like this.. (pains me each time I see how much I have to give away! to finance people in fees).

 

 

High level mortgage drawdown interest referenced above: (actually for a 12 mont period with 9 month build...)

 

 

 

The interest payments would be halved here by moving back to flat but possibly negated by the fact we have to pay the flat mortgage (400/month) but at least those payments were paying off my mortgage) We only get 450/month for rent. Plus selling it would free up £150k and provide ready cash so we can head off any cash issues and not so reliant on mortgage companies. 

 

So yes - definitely worth mentioning thanks and an area I  need to to do the hard and fats numbers on. But need to get firm on what it's actually going to costs and how much I need to borrow.  

 

I was unsure how well a mortgage company would react to releasing equity from current home to fund self build. but this is a very cheap option at circa £125/month on interest only against £120 (80% ltv) plus would allow us to stay here in comfort!  

 

 

Edited November 1, 2019 by SuperJohnG
missed a bit!

[redtop]

13 hours ago, SuperJohnG said:

p Lord have mercy........were you building on a cliff?! I have a large open flat plot..albeit you can never be complacent. I am hoping the risk is minimised.......picture attached.

not far of, 30 degree slope that has had to have 7 level terraces cut into it for the piling machine, plus create access road, dig out a turning head, remove retaining wall, 120m2 tarmac; the list goes on.... piles are 41 X 5M 220mm each that lock 1m into bedrock and are then filled with rebar cages and grout. groundworks took a month, pile foundations will be 3 weeks.  The good thing is that once this lot is done then the actual build, given the supporting steel we have, is simples.  TBH the services could have cost a lot more given the size of the plot and access issues (did I mention access road is 6ft wide and very steep with a 1 tonne weight limit...). That's cornwall -)

[Thedreamer]

I have found lenders to be incorrectly inflexible when trying to get finance. In Scotland you have very few choices, as example despite owning a serviced plot and working full time as a chartered accountant I was initially offered a laughable mortgage of £45k. 

 

As an example of how inflexible they can be, I have not been able to factor in money that I would save from not paying rent & minimal utilities etc into my cashflow. I also had to argue with my lender for about nine months about their fictional imaginary spending (for holidays, nights out and cinema etc) and stressed interest rates. Our night outs, have consisted of sweeping up, doing what work we can, research and obtaining best value!

 

Those £5,790 in fees send a shiver down my spine, my lender was £995 arrangement fee, £300 for valuation inspection and £50 for each subsequent inspection. That would be £4,000 blown away in the wind for us! As mentioned above it was a battle to get the finance we wanted, but the prize between the Buildstore route and selected lender was £4k.

[eandg]

23 hours ago, Thedreamer said:

My approach was to plan to put in cheap finishes (kitchen, bathroom, flooring) at the start and argue this with my lender. 

 

I calculated the contingency on each stage and when I passed this, I allocated the resources to upgrading the next stage.

 

Foundation ok (which is usually the big part of your contingency), allocate that bit to W&W stage (better slates, triple glazing, better larch, better insulation) and so on.

 

You also mentioned 12 months, personally as a young self builder I would hate that. Everybody circumstances are different but for us, even before we stuck a shovel in the ground, we converted my wife's parents loft in to a flat and once this was done, I was no longer ever stressed about finance as I was now saving a lot of money each month and it was just a matter of time. We wiped out our savings to do this but we had to take a step back and learn lessons to achieve a bigger goal.

 

You should also not get to caught in the m2, you could build 150m home for £1000 m2 and it could be worth less. If it's your forever home, value is however less important. 

 

For our build I'm not interested in the m2 or value, but more what is my all in property cost each month (mortgage, utilities/council tax and insurance etc). I currently calculate this to be around £550 a month which will mean I can always service the mortgage debt in what ever circumstances and always have a warm home.

 

Also importantly, cash is king. Don't just consider I have build cost of X with %Y contingency and this has been funded by x,y,z  are you going to be able to keep cash flowing during the build. Prime example being do your calculations for materials purchased by yourself included VAT? If you plan to buy a lot of materials you probably will have a lower final build cost but you might be looking at a creeping £15,000 VAT balance to finance till the HMRC repay you.

 

Sounds a good approach and one I'll adopt re: budgeting in a contingency. 

[SuperJohnG]

16 minutes ago, Thedreamer said:

Those £5,790 in fees send a shiver down my spine, my lender was £995 arrangement fee, £300 for valuation inspection and £50 for each subsequent inspection. That would be £4,000 blown away in the wind for us! As mentioned above it was a battle to get the finance we wanted, but the prize between the Buildstore route and selected lender was £4k.

They are the stuff of nightmares. Sp at all costs I'll be trying to minimise and avoid. Buildstore are laughable not very helpful I find from an point of view of pre planning. They spout some great stuff atbthe shows but so far my reality has been they are not here to help that easily. I do t mind paying a premium for a good smooth service but not for nothing. They have two fees just for them in there. 

[Thedreamer]

7 minutes ago, SuperJohnG said:

They are the stuff of nightmares. Sp at all costs I'll be trying to minimise and avoid. Buildstore are laughable not very helpful I find from an point of view of pre planning. They spout some great stuff atbthe shows but so far my reality has been they are not here to help that easily. I do t mind paying a premium for a good smooth service but not for nothing. They have two fees just for them in there. 

 

I'm not the most practical and have done jobs like painting, labouring and fairly easy jobs. 

 

I realised at the start where I could add most value to the project was in the financing, shopping around, seizing opportunities and risk management. 

[Dan1983]

Good read!

Im in the same boat, funds clear this month to go for a build but I’m really apprehensive of our budget and going over  or being near max before claiming VAT back!

Going to do a test dig at 600mm and see what sort of ground we are on