MattBetts

Is Self- Building a viable option for First Time Buyers in London

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Self build is normally detached houses which is less than 2% of homes in London.  I doubt any plot would be less than £850,000.  First time buyer in London = 1 bed flat or studio.

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I'm not  from London so have not filled the questionnaire, however I have a number of friends who live in London and Two of those have contemplated self build, both are millionaires. Id suggest the only option for a first ltime self builder would be to moving far out of London.

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A rich family my Mum once worked for did this in Hampstead Garden Suburb, but same as Triassic, they are multi millionaires and bought a huge house costing millions just to knock down and start again.

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Ok I filled it in. Actually with proper support and a bit of open minded (unlikely) thinking by government self building in London should be a great option. You can imagine for instance a steel framed block system comprising a number of small cuboid shells being made available with fixed point service connections that could the built off site by young people (who I assume you mean by FTBS in London) and then craned into place by professionals connected to the services and away they go. Being from London, both my children were born in Greenwich, I see FTBs in London as one of the biggest challenges for this great world city and I also think that self build encourages creativity and diversity. Part of the challenge now is to keep London, and much of the south east, sustainable because it is still growing but the strength of place, so much based on homeownership in the UK, is being hollowed out by house price challenges, the commute costs in place of mortgage costs conundrum and the economic and social pull of the big city. Without some enlightened thinking there is a big crash coming which will have some very interesting effects.

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Perhaps in marginal developments on marginal sites.

 

Remember that Walter Segal lived in Highgate with most of his projects in London.

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I am more intrigued as to why people think that self building is going to be cheaper.

We don't self-build cars, washing machines, TV's.

I have never heard anyone mention that it would be a good idea to self build a railway system, or an equivalent to a A320.  So why housing?

Where are the savings to be made, nailing a bit of skirting, running a few metres of copper pipe.

 

Or is it that self builders treat it as a hobby?

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Historically, when houses were all built from small components by hand, labour costs dominated the cost of a house and land cost was relatively small. If you could supply the labour yourself (true self-build) you could save a lot of money. It's much less true now, when many components are pre-assembled and there is lots of expense involved in complying with the enormous bureaucracy.

 

Of course, the self-build entertainment industry has built up the claims of money saving, even if you use a turnkey package - I suspect most of those claimed savings are just property inflation.

 

I did self build a colour TV in the early 70s, when they were incredibly expensive. In the end it didn't save much (just like house building) but it was a very valuable experience.

 

And people do make railways, boats and planes. http://www.bbc.co.uk/news/world-asia-39945650

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@JSHarrisbuilt one of his plane I think, but as I pointed out, it was a hobby, and, like me, he likes building things (I am still building my "£100" boat, on Mark 2 now).

 

@recoveringacademichad a spreadsheet about his costs, what struck me was the amount of money he had spent before he even started the real building work.

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It used to be common to home-complete sailing boats. You would buy in the fibreglass hull with as little or as much of the remaining items included and/or installed- engine and rig, generally- but then fit out the rest yourself. So lots of cutting plywood to build up the cabin interior, home-made cooking and electrical systems, etc. It allowed people to spread the cost of the purchase, and enjoy sailing their boat as soon as possible.

 

Fast forward to today, and that market has all but vanished. You can still buy kits and plans for little plywood dinghies, but the average cruising yacht is now built in a largely automated factory. Components are CNC machined, the entire cabin is built and dropped into the hull before the deck goes on. Metal plates are glassed into the mouldings and a CNC milling machine taps mounting points for hardware, all to millimetre precision, working directly off the plans.

 

The result is lighter, cheaper, faster builds. Arguably one of the reasons that the UK boatbuilding industry went under is because they were too slow to embrace the march of technology, and the French and Germans now dominate the market.

 

All of this being a rather diversionary way of saying- I agree with @SteamyTea that you can't just assume that self-build will automatically work out cheaper.

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1 hour ago, SteamyTea said:

I am more intrigued as to why people think that self building is going to be cheaper.

We don't self-build cars, washing machines, TV's.

I have never heard anyone mention that it would be a good idea to self build a railway system, or an equivalent to a A320.  So why housing?

Where are the savings to be made, nailing a bit of skirting, running a few metres of copper pipe.

 

Or is it that self builders treat it as a hobby?

 

I think it's historical.  When we did our first self build (and that was basically a turnkey with minimal input from me) 25 or so years ago, self building meant I got a detached house 50% larger than the semi I could purchase from a developer for the same money.  It also meant I could have a layout that suited us and the site.  We sold that first house in a stagnant market (so developers houses hadn't seen any price increase) and made 20% after taking into account selling costs.  

 

Then Grand Designs came along, followed by other programmes, which extolled the virtues and money saving that was possible. Securing a plot became more expensive as more people jumped on the bandwagon.  As the bandwagon rolled on, ever increasing land costs and construction costs (many tradesmen that I spoke to were delighted at the way things were going as it enabled them to raise their rates) nibbled away at the margin to the point we are at now in many parts of the country, where self building still gives you a benefit (site you want and design you want) but not the saving / profit.  House price inflation masked a lot of the reduction in profit margin for self builders.

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Yes, I have built a couple of aircraft, two cars, four boats (plus an old yacht restoration), an electric motorcycle, two electric bicycles and now a house.  None were significantly cheaper than buying something ready made, but three of the boats, one of the aircraft, the electric motorcycle, one of the electric bicycles and the house were designed by me, so were projects to get something I, or we, specifically wanted, and which wasn't available to just buy.

 

I suspect that a lot of self-builders choose self-build primarily to get the house that they want, rather than to save lots of money.  If you cost in your own time spent building something, then the price will often be greater than the price of just buying something off the shelf.  The hard part is assigning a value to the learning experience and the sense of achievement that you get from building something yourself.

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4 hours ago, JSHarris said:

The hard part is assigning a value to the learning experience and the sense of achievement that you get from building something yourself.

That could be considered the same as an undergraduate degree, so somewhere between £20k to 40k.  Not sure if it should be added to or take away from the price though ;)

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Is self build an alternative for first time buyers in london ? YES

Why is self build cheaper or better ? For so many reasons. 

 

Example ... 2016, Romford, guy buys side garden for 90k. 

Gets planing permission for a small foot print 4 bedrooms (8.5mx6.8m).

Planning architect, convenants etc, 15k

Gets a builder, Build cost 156k. 

Total, 261k for a 4 bed with a small garden. If we consider that the 3bed and 4bed old houses on his street are sold for 390-430k or a new 2 bed flat goes way above 300k... It is easy to understand why a self build would be better.

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I think that's a pretty unusual example, as plots are usually a lot more than that, especially in sought after areas.  For example, our plot is pretty small, just big enough for a 75m² footprint house and tiny garden, and was valued at £150k just over two years ago.

 

Our build cost came in at about £1380/m², for 130m², with no architect, planning consultants etc fees.  Had we used an architect then we were looking at around £18k for his fees, on top of the build cost.

 

Total cost to build for us came to around £335k, valuation at completion was around £340k, so no real profit, and that cost takes no account of around two years full time labour by me.

 

If you're very, very lucky you may find a site that no one has yet discovered, and buy it for a song, but I get the feeling these cases are pretty rare, especially anywhere near London or the South East, where plot prices are a lot higher than around here.  We're around 80 miles South West of London, and a local builder I know reasonably well stopped building speculative one off's years ago, as there was little or no profit in it.  I found that a fair number of plots we looked at were being sold by small builders, because they'd realised that it was no longer worth their time to build a house to sell on now.

 

I think a fair part of that is that build costs have increased a fair bit, and that coupled with the high premium that single plots seem to attract makes self building more of a way to get the house you want, rather than get a house for a substantially lower price.

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Even up here where plots are cheap, you will struggle to make any money building a house to sell. About 8 years ago someone built a bungalow to sell right at the end of our road, he already owned the land and it had been a paddock before he got permission.  After all the hard work he sold the bungalow for £50K more than the build cost. He said to me if he had know he would not have wasted 2 years of time, he would have just sold the plot to someone else to build on.

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