Builders margins?

[puntloos]

Still mulling over whether to build or not (we are progressing as normal, tendering comes next). 

One question came up: (with obv. just simple calculation values..)

 

If a plot's planning permission and full detail would create a 150m2 detached house that would be worth about 1M pounds in current market, how much would a builder be willing to pay for that plot (incl stamp duty etc) + design?

 

Normally, a builder tends to charge an end user say 2000/sqm in this area- so build cost would be 300,000, which means that presumably the builder would 'break even' at 700,000 for the plot+design.. but of course there's various risks involved that I might not be thinking through, size of the job, how busy you are etc.. 

 

So if you were a builder, what's your best offer for my theoretical house, and what things to you factor into that choice?

 

 

[Mr Punter]

Profit 15% = 150k

 

SDLT, fees for sale, SE fees, warranty fees, finance fees, BC fees, architect, QS, interest, valuations legals £80k

 

CIL 25k

 

Utilities £30k

 

Prelims £10k

 

Construction and fitout £300k

 

Contingency 5% £15k

 

Total £610k

 

Purchase £390k

 

[joth]

nit: I think your question is about value to a property developer, not a builder.  The former buys lands, commissions & builds house to resell. The latter just builds for money.

 

One option is to take all the guesswork out - give one of the estate agents in town a ring and get a valuation. Savills seem to do a lot of trade with developers. 

[Moonshine]

5 minutes ago, Mr Punter said:

Construction and fitout £300k

 

I don't know if the figure of £2k / m2 would include landscaping and driveways.

 

I am surprised a 150m2 house could attract a £1 mil price tag

[Mr Punter]

2 minutes ago, Moonshine said:

I am surprised a 150m2 house could attract a £1 mil price tag

 

Yes, expensive round there.  150m detached hits a sweet spot for £ per m2.

[Mr Punter]

4 minutes ago, joth said:

nit: I think your question is about value to a property developer, not a builder.  The former buys lands, commissions & builds house to resell. The latter just builds for money.

 

One option is to take all the guesswork out - give one of the estate agents in town a ring and get a valuation. Savills seem to do a lot of trade with developers. 

 

Agreed I am a developer.  Lots of builders do both though.

[joth]

14 minutes ago, Mr Punter said:

 

Yes, expensive round there.  150m detached hits a sweet spot for £ per m2.

17 minutes ago, Moonshine said:

I am surprised a 150m2 house could attract a £1 mil price tag

 

Our neighbours (same town) are asking 1.3M for a 120m2 60s property that has not been updated in several decades (and no granted PP), so I think @puntloos is low-balling with 1M for the rebuilt value

 

Caveat: "asking" does not equate to "successfully fetching", but it's a guide

 

Edited April 16, 2021 by joth

[Oz07]

10k per m2 crazy. Whereabouts is this @joth

[recoveringbuilder]

If it’s going to be worth £1m why are you even hesitating about building it? 

[joth]

11 hours ago, Oz07 said:

10k per m2 crazy. Whereabouts is this @joth

South Herts.

Anywhere outside the M25 but 20-odd minute train ride to zone 1 is probably on a similar COVID price surge. Stamp duty holiday has added some extra fuel to the market too (although obviously not directly applicable to these specific properties)

 

[Oz07]

My friends are hindhead I know it's pretty pricey round there