Big decision- any thoughts or observations welcome

[Neil M]

So, having spent nearly three years gaining planning (via appeal process) and then fulfilling the conditions set by the authority, we are all finally ready to go, fully deisgned and spec'd- only to find the estimates I'm getting from Builders are way higher than original estimates.  An estimated £450k build cost for a GDV estimate of £740K.   Equates to around £2750 p sq m-  towards the upper end of the UK range but we are in Oxfordshire so possibly to be expected and the other budget estimate was £550k!  Much as we'd like to progress with the build it seems financially at least, almost foolish to do so when the local agent tell us the plot is worth £280k as it stands (although I have my doubts about this valuation).  Ultimately, we just need to make a decision but I'm struggling with this and would welcome any constructive (no pun intended) thoughts as to the options: We see them as :   

 

1. Carry on trying to find a cheaper builder:  if succesful  likely to hold greater risks and any significant improvement seems unlikely. 

2. Don't use a main contractor, manage the project and sub contract ourselves: no experience, prospect makes me nervous!

2. Wait for build costs to come down - Will they? before our planning expires in 2 years?

3. Put the plot up for sale and see what value it achieves and then review.  I suppose the price will depend on how much cheaper a developer could build than I'm being quoted?

 

[ProDave]

Hi and welcome to the forum.

 

You have hit upon what all self builders "down south" find.  Building plots and getting planning permission is so hard, the few plots that come onto the market are way over priced.  If your motivation for self building is to get a house for less money, forget it.  If your motivation for self building is to get a house that is better built than an off the peg developer house, it might be worth paying more to proceed.

 

Re the limited time on the planning permission, some people make a "start" on the development, that may mean installing the foundations or sometimes something more minor counts as "starting" and once you have started the planning is locked in without a time limit.

 

Have you considered doing more work yourself?  What skills do you have?

 

And roughly where in Oxfordshire?  That's where I came from originally.

[PeterW]

15 minutes ago, Neil M said:

Wait for build costs to come down - Will they? before our planning expires in 2 years?

Or make a material start and lock in the planning for perpetuity. 

[Marvin]

IMHO I cannot see materials becoming cheaper in the next 2 years, and so we are installing everything we can now.

 

But this does not mean I am right just my opinion. Time will tell.

 

What your motovation to build and your financial position are will influence others opinions.

[Kelvin]

1. Keep trying but how much cheaper would it need to be before you decided it would be ok to proceed. What spec are you building to? Anything you are doing that you don’t really need but is nice to have. I had originally specced home automation but removed it. We also wanted to build a big timber garage/workshop to a similar spec to the house. This has now reduced to an insulated steel building. We’ve cut back on our cladding material which has halved the cost. We are still pretty high end on flooring but can half the cost of that too if needs be.  I want PV and battery storage but might just go PV for now etc. All of the above decisions have reduced my costs by about £90k

 

2. This is what we’re doing. It’s a well worn path as many people start at turnkey then go main contractor, self manage, build it themselves mostly driven by cost. You need to be realistic with yourself if you’re going to self-manage which is mostly about the time you have available. 

 

3. Waiting is a risky strategy. Things aren’t getting cheaper. Inflation is in danger of running away from us and is likely to be here for the next few years. There could well be a big collapse in demand and the next 6 months will tell us that. We plan on keeping going. If you make a start on it then the plot keeps the planning status in perpetuity. If nothing else I’d do this as a minimum. 
 

4. Selling the plot is definitely an option. It will have increased in value over the last 3 years etc. However,  finding someone to buy it might be a bigger challenge though. No harm in testing the market. 
 

If your plan was to build to make money on the deal then forget that. If it was to build a much better house than you could afford to buy on the open market and you can do it for about what the final house is worth  without ruining your finances and you plan on living there for a long time then do it. 

 

 

Edited August 24, 2022 by Kelvin

[nod]

The problem your having with a fixed price Is builders are having to load the price in anticipation of price rices 

If you find a builder that comes close to your original budget He May run out of funds part way through and pull off

You best bet is to do what all the major builders are doing with the subcontractors 

Ask for a realistic quote and agree to stand the material rises If and when they come 

[Neil M]

Thank you all for the responses, some very helpful observations.  We are in one of the villages outside the Oxford ring road and I think we had just assumed that the third/third/third (plot/build/profit) balance should apply, and clearly it doesnt here and now.  The comments re our motivation are key, that was originally simply financial but as time has gone on we have become miuch more focussed on/excited by the project itself. We're not speccing at a high level so in reality the cost is likely to only go up unless we do  much more ourselves.  We could make a start on the build to preserve planning and wait and see, but theres an element of putting life on hold which I'd be uncomfortable with.  I'm inclined to think puttiing the plot on the market is the best approach as at least then we'll have a proper benchmark of value before finallly deciding.   The local agent is bullish about selling the plot, I guess we'll see if he's right..  Thanks again all, if you think there are better routes than through the local estate agent I'd be interested in any views.  

[Bozza]

You have been honest enough to admit your original motivation to self build was to make money.    But now moving towards the excitement of self building a house better than you’d get from a developer.  I was exactly the same as you.  I thought I could build a great home and end up with money in bank.  I realised I couldn’t and built a home that has made money , but perhaps 10%-15%, of cost to build all in.  Certainly not 33%.  If you want to make big money in this game you need to build small crap houses squeezed into a plot.  Like what the big companies do.  

 

I am of firm belief that you shouldn’t self build to make money, but you shouldn’t  self build to lose money.    if you build to lose money your doing something stupid, if you build to make money you’re probably comprising somewhere.

 

Bottom line is with self building you are normally enjoying your wealth by living in it, as opposed to looking at it on a bank balance.  don’t forget with 10% ish inflation every £100k in the bank is worth 10% less than a year ago though.   Self building, if you do it well, will make you richer, just in terms of lifestyle as opposed to monetary richness.  

Don't self build to try to make a lot of money / profit

Do self build to build yourself a home that better than you get buy elsewhere

 

would be my take on it.

 

 

 

[Canski]

Unless like me you are self building as a stepping stone to the ultimate final house which will be similar to what most of you are building. I need to make some money on my next project so I have to compromise between 'developer built houses' and top notch self build quality.

[Faz]

You don't need to compromise on quality.  You may need to compromise on spec but quality is just ensuring that what should be done has been done in a workmanlike manner by a competent tradesman.  If you get the right people on board then quality costs nothing other than supervision time.

[Mr Punter]

Lots of self build plots seem to be priced at GDV minus build cost with no profit or contingencies.

 

If you can get £280k, sell the plot.

[Neil M]

Thanks all.  I'll see what the market offers up!   Althogh it's been a time consuming and drawn out process, just having successfully gained planning on a plot previously declined at Appeal provides some satisfaction in itself... although some £s would be nice too