Self-Build first steps – advice sought

[bpk101]

Hi — My OH and I have recently discussed the idea of building our own home in the next 5 or so years. With currently little to no experience of the self-build process (we did however extensively renovate our current first home) i'm keen to start researching now, appreciating how long a project like this could take.

 

It feels like the first thing i need to establish (and correct me if i'm wrong) is how we might finance a self-build and what our projected budget might be in 5 years time. 

 

So... is projected budget the best place to start the journey? If so, how do we approach it? Do we start contacting self-build mortgage providers or brokers now to discuss what level of financing might be available to us or is it too early? 

 

Without knowing our potential projected budget there's no way of us knowing where we could possibly build (plots no doubt vary in price according to region), what size and type of house we could build and indeed if we can consider a self-build at all! Therefore it feels like the natural place to start.

 

Any advice on the first and best foot forward would be greatly appreciated. 

[scottishjohn]

welcome to the forum 

at least you have a plan as to when you want to build  and as long as you accept it could be a like elastic ,then you will get there 

very rough quesstimate on house build cost would be ,depending  on how you much you do your self --and what spec of internals --that is usually variable by at least 100% if not more 

 so to be safe think around £1500-£2500 per sq m

 then the price of the plot 

 so decide on a budget 

So first job is to decide where you can afford the plot you want 

where I am in s/w scotland a plot could be £60k-100k same plot in other places could be 800k

so the sooner you work that out and if you have cash  buy your plot  

do not get tied up in the details yet -all build systems can do what you want -work out the plan and how to fund it when you start

the next problem is that you cannot get a mortgage -simply on any house unless it is habitable 

3 estae agents have told me recently that they expect rebuildable ruins and plot prices to jump son ,especially if the second wave is bad -people worried about money in investements and stocks =shares crashing 

so land has always to some extent been like gold -but thye are not making nay more land 

my rebuildable house plot i am selling has risen in valuation in the last 3 weeks by estate agents  some by as much as 25% as projects with land are getting desperately short -good  for me 

 

Edited September 19, 2020 by scottishjohn

[recoveringbuilder]

5 years is quite a lot of time to be able to predict where you will be financially especially in these uncertain times. You obviously have a house just now and no doubt have some idea of its value, you can probably predict how much you will be able to save in these 5 years (barring any unforeseen circumstances)so I would have this as your starting point. I have never planned a build that far in advance (financially anyway, they have always been on the cards) but with an idea of a ballpark figure made up of house value and savings you can start to look at what you predict you’ll can afford. Who knows what will happen with house and plot prices in the coming 5 years, although property prices are on the up just now after the first wave of the pandemic there’s nothing to say they won’t collapse again just as quickly. When we sold our first house in 2006 prices were on a high however by the time we had finished our second build in 2008 (financed mainly from the sale of the first) prices had taken a nose dive so even the house we were building was no longer worth what Estate agents had predicted when we started the build. I don’t think there’s any exact science to it and you have to think realistically about what you could build.The up side to the fall in house prices during our second build was that with demand falling we were able to secure materials at better prices.

[PeterW]

Welcome ..!

 

So lets start with location you want to build in, and what equity you have in any current house or savings etc. That will probably be the biggest factor in affordability. If you’re in Weybridge rather than Wrexham, land will be considerably more expensive. 
 

Start with a rule of thumb that any BS or lender won’t go above 80% LTV for plot and build. Take a conservative 3 x joint income as a value of max mortgage, and add that to the equity. Then subtract a 1/3rd for land, and divide the rest by £1500.. you now have a very rough idea of what size house you are building ....

 

So say you have £75k equity and joint income of £80k. Your total would be £315k, plot budget of £105k, build budget of £210k giving a house of 143sqm. That’s about the size of your average developer 4 bed box, and assumes you’re nowhere in the south east of the U.K.  Start adding lots of other factors such as difficult sites, slopes, access, long utility connections and that £1500 goes up, your available size goes down. 
 

It’s all about location to start with, and how much you’re prepared to do yourself. 
 

 

 

 

 

 

[nod]

11 hours ago, bpk101 said:

Hi — My OH and I have recently discussed the idea of building our own home in the next 5 or so years. With currently little to no experience of the self-build process (we did however extensively renovate our current first home) i'm keen to start researching now, appreciating how long a project like this could take.

 

It feels like the first thing i need to establish (and correct me if i'm wrong) is how we might finance a self-build and what our projected budget might be in 5 years time. 

 

So... is projected budget the best place to start the journey? If so, how do we approach it? Do we start contacting self-build mortgage providers or brokers now to discuss what level of financing might be available to us or is it too early? 

 

Without knowing our potential projected budget there's no way of us knowing where we could possibly build (plots no doubt vary in price according to region), what size and type of house we could build and indeed if we can consider a self-build at all! Therefore it feels like the natural place to start.

 

Any advice on the first and best foot forward would be greatly appreciated. 

If you add your location it would help narrow things down 

[bpk101]

Thanks for the great advice. I suppose what i feel i'm facing is a bit of a chicken and egg scenario... 

 

How do i know what size plot to look for until i know the size of house i'm going to build on it?

How do i know what size house i'm going to build on it until i know what budget we'll have in 5 or so years to invest in the project?

How do i know what budget we'll have (and what we might need to save in the meantime) until we talk to lenders?

 

Plot first and build a house that fits?

Or desired house size first and find a plot that's suitable?

 

Also, before we embark down the self-build road I want to be absolutely certain we can afford it (plot, fees, build... the lot) before falling in love with an idea that's not achievable, or will create a huge financial burden later in life.

 

Our other option is to buy and renovate an existing house already in the style of the home we dream of living in (we're big fans of modern architecture, from mid 20th century to contemporary style). Websites like The Modern House and WowHaus specialise in these properties but i'm hoping a self-build will allow us to design the house exactly to our specification and, from what i hear, work out somewhat cheaper than buying an existing house(?).

 

Any more advice on this would be great.

 

[Edit] Between writing this reply and posting it i've seen a few more responses (thanks!) so apologies if my questions above touch on topics your new advice i'm about to read offers.

 

Edited September 19, 2020 by bpk101

[bpk101]

Some more excellent advice, again thanks! 

 

Just to answer some of the questions in it and share about bit more info...

 

We currently live in Walthamstow, North East London. We bought a small 2-bed, 1 bath Victorian terrace in 2015 for £415k. We extensively renovated it adding a side-return kitchen extension and a loft conversion, the house now has 4 bedrooms, 2 bathrooms and was valued at between £650k—£700k pre-Covid (god knows what it's worth now!). We've not paid a huge amount off of the mortgage in 5 years but have obviously added value. 

 

We have a collective household income of around £250k although i freelance so mortgage lenders might look unfavourably on that? We don't have a huge amount of savings currently, maybe £40-50k max. but we're willing to put a 5 year savings strategy in place when we know what we need. 

 

We'd love to build somewhere within 50-60 miles of London but appreciate this could hugely increase the land value so are willing to look farther afield but both our jobs are fairly London-centric so we'd need to visit for work every now and then. 

 

My OH wants 6+ bedrooms, i just want a comfortable family home in the architecture style we like. 

[Mr Punter]

(a)  Calculate how much you can borrow.   For a rough figure assume you can borrow three times your joint income.

 

(b)  Calculate how much cash you can put in.  Add your savings and your equity in your current property.  If this figure is less than 25% of (a) you may need to save more or borrow less.

 

(c) is your maximum all inclusive budget from (a) + (b) .

 

Let us know (c), where in the country you are and how much work you would be able to do yourself and we can have a stab at what you could build.

[Mr Punter]

Our posts crossed above.  The main info now is how much input / how hands on your are likely to be?

[PeterW]

So arguably you’re looking at £750-800k with everything, as a top line. 
 

Assuming you are prepared to either head north east into Suffolk or Norfolk, or stretch the commute to hit the Leicestershire / Rutland / Warwickshire area (that is all <1 hr to London by rail) then you may be able to get what you want. £200k for a plot gets you something reasonable in those areas, but it won’t be huge. Add in £50k for fees / designs / prelims etc, and you have £500k as a budget to build.
 

That will get you into the 230-275sqm floor space which is ok for 6 bed, but taking into consideration you want modern then it may be pushing your budget over the £2000/sqm as I expect you will be looking at a lot of glazing etc. Those are expensive things to buy, they are also very divisive when it comes to planners ..!! A modernist box is marmite - some will allow, and some will not under any circumstances, and you may need to spend on planning consultants to get what you want. 
 

 

[Alexphd1]

Many ways to go about this but here's my 2p worth....

 

Yes you can afford to build but its a long path. Your biggest issue is finding suitable land. If you where 100% on this project (not just some talk after watching a episode on grand designs) i would start looking for land now and work from this. PeterW gives realistic figures on this above. I would approach lenders on remortgage your existing property for funds for the land.  If you can find land with a neighbours house in the style you like thats a big help for planning (if you find land you like in area of small thatched cottages just forget it)! You have a healthy income so I would plan a slow build (5 years start to finish) and clear the bills as you go creating no more debt while living in your existing  property you may have to cut lifestyle to achieve this. Build in steps ie contractor in to do site work and foundations then stop for 6 months then move on to the next stage. If you can remove funding issues associated with selfbuld ie stage payments from lenders etc then you remove a lot of hassle/tears.

 

Get a tape measure out and measure your existing home, sit down list out what do i want rooms size quantity etc. Go and visit a few showroom newbuild on developments for room size (dont be taken in with furnishings yet) look at kitchen size come away with a floor plan schedule with a m2 on each room. Everybodys ideas are different for 6 bedrooms I would be looking for at least 400m2 over two floors which would give you a foot print of 200m2, add in another 60m2 for a double garage. We are building 480m2 for 4 bedrooms but everything is nice sized (in my opinon). Next build is 650m2 for 5 bedrooms with 150m2 garage/workspace.

 

If you get this right you may end up in your dream home 6-7 years time with no or little mortgage.

 

 

[Jilly]

It's a big learning curve. 5 years should do it!

[bpk101]

4 hours ago, Mr Punter said:

how much input / how hands on your are likely to be?

 

I've seen this mentioned a few times i.e. 'how much am i looking to get involved'. What does this typically mean as i presume it just means being hands on with building work?

 

Well for a kick-off i have zero practical building / construction skills (although i'm definitely not afraid to get my hands dirty). But before i run off and start signing myself up for bricklaying and plastering courses (no doubt to the detriment to the quality of the finished build!), how much of a cost saving does 'getting involved' really and honestly make? Especially given it would mean a loss of regular income if i were to pause on my day job for the duration of the project to do so?

 

Or does 'getting involved' and saving money from doing so extend beyond just manual labour / building work?

 

 

 

 

 

 

 

[Declan52]

You can get involved by doing actual building work like building blocks or bricks, first fix joinery , painting, laying flooring etc. This will obviously depend on two things mainly , time and money. If you have the money you normally get these trades in or if you have the time you slowly work your way through different jobs according to whatever skills you have.

Or you be the person running the build. Organising all the different trades and making sure they have whatever materials they need at hand. You be the one chasing down prices trying to save a pound here and there and by the end of the job all these savings will add up.

Some of us here do one of these, others both and some none. It will all really depend on your own particular circumstances. How much time can you devote to the build while still trying to do your normal everyday job and tasks.

[Bozza]

Just another wee thought or idea.    Would an option be to buy perhaps a small ugly house in the area you like.  Rent it out for a few years to cover any mortgage payments.  Then when you’re ready to self build have the house demolished and replaced with your self build.  Or even better if you could find somewhere suitable that would have sufficient land that would allow the self build to progress prior to demo of the original house.  Somewhere you can temporarily stay. 

 

I would be careful about over committing to a high budget build unless you are in a 100% secure job or have massive cash reserves.

 

 

[Russell griffiths]

If you have the salary that you say then there is no gain whatever from doing any of the work, stick at what you do best and just sign the cheques, be a very good manager, and not a poor bricklayer. 

[Alexphd1]

Bozza, Issue with renting you are creating more hassle and work. Your house has to be up to (cosmetic amd safety) standard which will cost and i would imagine the OP is in a high tax bracket aswell for the extra income. To buy a house with enough ground is a option, again its down to finding the right ground!

 

As Russel says above, do not give up the day job but I would do your homework and know exactly what you want inc knowing a decent price. You have found a good place to start here!

[bpk101]

Project managing the build, organising trades and materials is definitely something i can do, I oversaw all of this during the renovation of our current house. We renovated our house in stages over 3 years using different build teams for each stage (due to availability). We added a side-return kitchen extension, loft conversion, main bathroom remodel amongst many other things and are thoroughly happy with the outcome. 

 

I also thrived when it came to researching materials, fixtures and fittings often finding products at a considerably lower cost than the builders were quoting (for the very same product). Example – builders supplier quoted £2k for a particular kitchen UFH system, i found the exact same system for less than £600 which they were more than happy to install. I researched and purchased everything, from the big ticket items like glazing, under floor heating systems and flooring right down to the toilet cisterns and lighting fixtures.

 

Do self-builders often hire a project manager then and what sort of cost can be saved if i did this myself? 

Edited September 19, 2020 by bpk101

[scottishjohn]

1 hour ago, Russell griffiths said:

If you have the salary that you say then there is no gain whatever from doing any of the work, stick at what you do best and just sign the cheques, be a very good manager, and not a poor bricklayer. 

but you still got to find the right plot - and then get the right design for your budget 

[Alexphd1]

It sounds like you have the perfect credentials for the project managers job. 

[epsilonGreedy]

9 hours ago, bpk101 said:

My OH wants 6+ bedrooms, i just want a comfortable family home in the architecture style we like. 

 

 

Six bedrooms is an odd aspiration. When splashing out on extra space most self builders opt for a walk-in pantry, home cinema room, a home office, sauna, gym, a garage workshop, a big statement hallway with a galleried landing or a snug.

 

Family unit size is on a long term downward trend in the UK, the number of house hunters looking for 6 bedrooms squeezed into under 3000 sq ft and packaged a modernist shell is small. I suggest you first decide what you need, then comprehend what buyers seek in your location/project price bracket and then review what other self builders splash out on as internal square footage increases from a not half bad 2000 sq ft to a deluxe 3000 sq ft.

[Alexphd1]

6 bed is not a odd target but everybody has different priorities. It would be pretty boring if we had all the same aspirations! 

[epsilonGreedy]

3 hours ago, bpk101 said:

Do self-builders often hire a project manager then and what sort of cost can be saved if i did this myself? 

 

 

According to the booked titled "Housebuilder's Bible" project management would be around 12% of total build cost.

 

I don't think many Buildhubber's opt for a project manager. From reading posts here for 2.5 years I reckon the breakdown might be:

• 10% Stoic go it alone, hands-on, within minimal professional help.
• 20% Light-touch professional guidance such as staged quality inspections done by an architect, material selection & quantities drawn up by an expert and/or having an expert builder on-call for adhoc problem solving.
• 30% Appoint a main contractor who will get a timber/kit house to a weather tight stage after which the self builder takes control of managing trades for the internal stuff.
• 35% Appoint a main contractor for the whole build.
• 5% Tick multi-choice options lists on the Potton Homes kit house order form, wait 9 months and then pick up the keys.

[Russell griffiths]

16 hours ago, scottishjohn said:

but you still got to find the right plot - and then get the right design for your budget 

That’s right, but that doesn’t mean giving up your day job and going on a plastering course. 

[bpk101]

On 19/09/2020 at 09:25, PeterW said:

Take a conservative 3 x joint income as a value of max mortgage, and add that to the equity. Then subtract a 1/3rd for land, and divide the rest by £1500.. you now have a very rough idea of what size house you are building

 

 

 

 

 

 

I'm just putting some slightly more accurate figures through this formula you kindly offered... 

 

Our joint income is actually £295k when i add in average annual bonuses over the last few years. I believe these are included as part of your salary when applying for a mortgage? If i remember correctly they were when we applied for our first mortgage.

 

We have equity of £60k and savings of £50k.

 

So i'm arriving at a maximum mortgage of £885k (3 x joint income) plus equity is £945k

Divided by 3 gives us a land budget of £315k (if we add cash savings to the land budget we get to £365k)

That leaves £580k divide by £2000 (i'm being slightly more generous with the cost per sqm here) giving us a potential house size of 290 sqm

 

Is this correct? Another way of calculating it might be this although i get a different outcome...

 

£885k (3 x joint income) plus equity and savings = £995k

Divided by 3 gives us a land budget of £331k

Leaving £664k divided by £2000 = 332 sqm

 

Also, will the approx. £50k fees come on top of this or are they included in the build cost formula?

 

Thanks.

 

Edited September 20, 2020 by bpk101