I want to build a house to sell and I was wondering if anyone has any advice about the best way to finance such a project.  There are three of us involved in this and we have some money to put down but not enough to fund the whole thing.

 

From the reading I've done so far,  I'm thinking a developer loan may be the best option. If anyone on here has done this type of thing before, I'd be interested to hear your opinions.  

 

Thanks

 

Matt

A developer loan will be expensive 

An equity release would be much cheaper 

 

do check also if your local authority has CIL (community infrastructure levy) as that will put many 1000's on your cost, our exemption was for 52k because we will live there.

 

Do also seek tax advice. 

Developers might pay Income tax not cgt.

Can't reclaim the VAT on materials unless you are VAT registered?

No exemption from the CIL.

 

If I were you I would build it for one of you to live in.  Minimum 3 years to qualify for the CIL exemption. 

 

If you build to rent out beware new this makes the house liable for VAT. There might be ways around this.

 

HMRC will look at your intention at the outset. If you take out a developer loan you should expect HMRC you treat you as a developer for tax purposes not a self builder.

 

Are you sure you can make a profit building a house in this market? We bought our plot from a builder. He sold it because he didn't think he could make any more money actually building the house. He was right. We have a great house but it cost us more than its worth now.

 

 

 

 

 

 

All the lenders will want you to have a track record, a decent lump of cash to put down, a properly costed development appraisal and personal guarantees.  They also charge a lot.

What makes you think you can buy a plot, agree planning, pay all charges and professional fees, build, market and sell a property better than anyone else?

 

The land registry shows a drop of 1.1% in January, 1% drop in February, with industry experts predicting a downward price trend in 2023.

Edited April 23, 20233 yr by SteamyTea

Thanks for the replies.  Definately some food for thought.

 

 

 

37 minutes ago, SteamyTea said:

What makes you think you can buy a plot, agree planning, pay all charges and professional fees, build, market and sell a property better than anyone else?

@SteamyTea  I never claimed any of those things.

Edited April 23, 20233 yr by Matt78

@Matt78 I would start with a few paperwork exercises. Find a plot that's already sold and how much for. Get copies of the planning drawings. Try pricing up what you think it would cost to build the approved house. Make a big spreadsheet itemsing everything you can think of including buying and selling costs. Maybe even find a retired builder or Quantity Surveyor to check your spreadsheet. Compare with what estate agents say similar houses are sell for (Some of the online automated valuation sites are miles off, like double in sone cases). 

 

There are books worth reading. Any figures will be out of date but they will include things you have forgotten about. 

 

The House Builders Bible

Self Build Manual

Building Construction Handbook

And others if you want to build Passive/Eco Houses.

 

The hard part of building is not the actual building. It's dealing with people. The banks, the planners, companies that don't deliver materials, trades that don't turn up or do shoddy work. Neighbours, Companies that go bust with your money. Utility Companies !

 

 

Edited April 23, 20233 yr by Temp

You sould like you know the crack on the building side, make sure you are u pto date with the new regs as well. massive changes.

 

Start small and no borrowing as there wont be enough fat in it if you borrow.

 

Temp has hit the nail on the head, the hassle is with the paperwork people, banks, planners, warranty, SE, etc etc