"Cost per sqm" messing up mortgage

[BTC Builder]

I'm 6 weeks into an application for a self build, tax returns checked and approved etc, and the qs check, if you can even call it that, has just completely messed it up. 

 

Labour costs are minimal, around £30k, as its going through the family business, it's materials only really. The total estimated build cost is £200k, £170k of which is materials. 

 

The broker (who I won't name but has been very helpful, no complaints) came back to me and said the qs has said estimated build cost is £400k-£700k based on their own cost per sqm. 

 

As far as I'm concerned, this is nonsense. That's the price an indulgent accountant or lawyer might pay a project manager to do the build for them. It's not the price i will be paying, not even close. I've been very clear about the minimal labour costs to the broker, but it seems the lender has just ignored them.

 

I also find "cost per sqm" a very strange way of costing up. It's a two story property, so if I were to halve the size of it by making it a bungalow, the build cost would not halve as the foundations, roof, and floor slab are the same regardless. Conversely, going from bungalow to two story does not suddenly double the cost.

 

Are there any lenders who actually look at your costings (or will price it accurately themselves) rather than just doing a basic cost per sqm?

[AppleDown]

Who have you gone with? Buildstore (or Buildloan) did a pretty comprehensive breakdown included in their fee - not as good as the Proquant one, but basically both came out nearly exactly the same. My own project sheet is slightly less as we'll be doing initial dig, cladding, some roofing, decorating etc. But everything matched up to what I had originally thought and what had been discussed on the mortgage amount.

[JohnMo]

5 minutes ago, BTC Builder said:

said estimated build cost is £400k-£700k based on their own cost per sqm. 

But doesn't your loan to cost ratio move more towards your favour. Say you want to borrow £200k, the QS say cost is £800k you are only borrowing 25%. Lower risk for the mortgage company.

 

Or am I missing something?

[nod]

32 minutes ago, BTC Builder said:

I'm 6 weeks into an application for a self build, tax returns checked and approved etc, and the qs check, if you can even call it that, has just completely messed it up. 

 

Labour costs are minimal, around £30k, as its going through the family business, it's materials only really. The total estimated build cost is £200k, £170k of which is materials. 

 

The broker (who I won't name but has been very helpful, no complaints) came back to me and said the qs has said estimated build cost is £400k-£700k based on their own cost per sqm. 

 

As far as I'm concerned, this is nonsense. That's the price an indulgent accountant or lawyer might pay a project manager to do the build for them. It's not the price i will be paying, not even close. I've been very clear about the minimal labour costs to the broker, but it seems the lender has just ignored them.

 

I also find "cost per sqm" a very strange way of costing up. It's a two story property, so if I were to halve the size of it by making it a bungalow, the build cost would not halve as the foundations, roof, and floor slab are the same regardless. Conversely, going from bungalow to two story does not suddenly double the cost.

 

Are there any lenders who actually look at your costings (or will price it accurately themselves) rather than just doing a basic cost per sqm?

Exactly 

We are coming in around £1000 m2 £815 last time Five years ago 

We are on just over 400 m2 But a massive chunk of the money is on foundations and surveys Kitchen also 

Building a small house puts you up against it from the start 

[Mr Punter]

1 hour ago, BTC Builder said:

total estimated build cost is £200k

 

Is that plus fees, prelims, service connections, scaffold, welfare, insurances, warranty etc?

[Andehh]

4 hours ago, nod said:

Exactly 

We are coming in around £1000 m2 £815 last time Five years ago 

We are on just over 400 m2 But a massive chunk of the money is on foundations and surveys Kitchen also 

Building a small house puts you up against it from the start 

 

Please ensure you post the context when setting expectations. You are in the trade and did a huge amount of work yourself. Sqm indications should assume average Joe approaching things.

 

We came in at £2400 build only, for a high spec/large bungalow. Very happy with the cost/final bill

[Alan Ambrose]

Do you have the option of submitting another qs number from an independent third party? I guess the mortgage co are just trying to do a sanity check, and your special circumstances make you look ‘different’. And institutions find it hard to do ‘different’.

[BTC Builder]

6 hours ago, Mr Punter said:

 

Is that plus fees, prelims, service connections, scaffold, welfare, insurances, warranty etc?

That's all in, although there aren't any service connections required or any prelims required. 

[BTC Builder]

2 hours ago, Alan Ambrose said:

Do you have the option of submitting another qs number from an independent third party? I guess the mortgage co are just trying to do a sanity check, and your special circumstances make you look ‘different’. And institutions find it hard to do ‘different’.

 

No idea, this only came about late Friday so we'll have to see what happens during the week. 

[eandg]

We went with Ecology, who accepted a spreadsheet setting out a breakdown of quantities and costs for materials, with a separate column for labour costs for each element (some was nil cost as DIY, some costs for trades).  

[BTC Builder]

my home won't meet the sap score required. I couldn't even get building regs without a heat pump.

 

with 100mm cavity pir, insulated boards, areated blocks, heat pump and a roof full of panels, I still couldn't get the sap score for ecology 

[bassanclan]

What they want to know is if you start the build, get the foundations in and then suddenly stop paying the mortgage they can get their money back.

 

If will cost an everyday person 400-700k to build, but the finished house may only be worth say £500k, then a mortgage company may have reservations about lending as how much would the land be worth?

It's only worth something to those who have "free" labour

[BTC Builder]

 

14 hours ago, bassanclan said:

What they want to know is if you start the build, get the foundations in and then suddenly stop paying the mortgage they can get their money back.

 

If will cost an everyday person 400-700k to build, but the finished house may only be worth say £500k, then a mortgage company may have reservations about lending as how much would the land be worth?

It's only worth something to those who have "free" labour

 

it's worth north of £1,000,000 when finished.

[JohnMo]

14 hours ago, BTC Builder said:

home won't meet the sap score required

 

4 minutes ago, BTC Builder said:

worth north of £1,000,000 when finished

 

14 hours ago, BTC Builder said:

still couldn't get the sap score for ecology

Sort out your insulation and airtightness, get it to a decent SAP score. Then you will.

 

If you need assistance ask. PIR in a block cavity may look good on paper but typically is badly installed because difficult, wider cavity, eps beads, better U value, easy to install, better result for less faff.

[eandg]

On 09/06/2024 at 12:27, BTC Builder said:

 

 

it's worth north of £1,000,000 when finished.

Be an absolute waste if you don't do it right then... In the scheme of things a bit of extra cash on insulation and airtightness is pennies. We were probably another 10k on getting above building regs minimum and it'll pay itself back in 5 or 6 years. 

[Dave Jones]

On 09/06/2024 at 12:27, BTC Builder said:

 

 

it's worth north of £1,000,000 when finished.

 

if the real QS is 700k then it will be loss taking into account he plot/clearance costs. Can see their point, they have to pick up the pieces if you fail and still cover themselves.

 

What m2 cost are you at with your materials only budget ? less than 50% of reality i would guess.

 

 

[BTC Builder]

On 18/06/2024 at 07:23, Dave Jones said:

 

if the real QS is 700k then it will be loss taking into account he plot/clearance costs. Can see their point, they have to pick up the pieces if you fail and still cover themselves.

 

What m2 cost are you at with your materials only budget ? less than 50% of reality i would guess.

 

 

 

You have no idea what you're talking about.

[Kelvin]

I don’t see how a house that will be worth £1million will only cost £170k in materials. 

[BTC Builder]

13 minutes ago, Kelvin said:

I don’t see how a house that will be worth £1million will only cost £170k in materials. 

How much do you think concrete blocks, sand and cement, plasterboard, tiles, concrete, trusses and floor joist cost?

 

[Marvin]

On 08/06/2024 at 12:59, BTC Builder said:

I also find "cost per sqm" a very strange way of costing up. It's a two story property, so if I were to halve the size of it by making it a bungalow, the build cost would not halve as the foundations, roof, and floor slab are the same regardless. Conversely, going from bungalow to two story does not suddenly double the cost.

In my experience, a bungalow with a 100m2 footprint has about twice the footprint of a 100m2 house (the roof is also twice the size).  

 

Moving on.

 

When completing estimates in my role as a QS I found that the less detailed information received the less accurate the figures derived. Rubbish in rubbish out!

 

Always good to start with a yardstick. What build standard your trying to obtain, what quality the finishes your looking at, what size and basic shape is the building and what is the site location and history.

 

Another thing you could do is take the QS figure and deduct the cost of the labour your saving.

 

And just a thought...

Will the water company charge you for connection?

Will the electricity company charge you for connection?

Will you have to run ducting for fibre optics?

Will you have to install a EV charging point?

Will you need foul sewage pipe connection?

Will you have to make a soakaway?

 

At Travis Perkins PIR has gone up 9% from the beginning of June and is expected to go up another 10% in August.

 

7 minutes ago, BTC Builder said:

How much do you think concrete blocks, sand and cement, plasterboard, tiles, concrete, trusses and floor joist cost?

 

Anyone could look that up at travis Perkins and make a budget.

I think you should look at all the categories in a Spons Estimating Cost Guide to see how much is not on your list and check the building regulation as to how many weird and wonderful requirements there are.

 

Good luck 

 

Marvin

 

 

 

[BTC Builder]

5 minutes ago, Marvin said:

In my experience, a bungalow with a 100m2 footprint has about twice the footprint of a 100m2 house (the roof is also twice the size).  

 

Moving on.

 

When completing estimates in my role as a QS I found that the less detailed information received the less accurate the figures derived. Rubbish in rubbish out!

 

Always good to start with a yardstick. What build standard your trying to obtain, what quality the finishes your looking at, what size and basic shape is the building and what is the site location and history.

 

Another thing you could do is take the QS figure and deduct the cost of the labour your saving.

 

And just a thought...

Will the water company charge you for connection?

Will the electricity company charge you for connection?

Will you have to run ducting for fibre optics?

Will you have to install a EV charging point?

Will you need foul sewage pipe connection?

Will you have to make a soakaway?

 

At Travis Perkins PIR has gone up 9% from the beginning of June and is expected to go up another 10% in August.

 

 

Anyone could look that up at travis Perkins and make a budget.

I think you should look at all the categories in a Spons Estimating Cost Guide to see how much is not on your list and check the building regulation as to how many weird and wonderful requirements there are.

 

Good luck 

 

Marvin

 

 

 

I'm a builder, I've priced everything down to the last wall tie. No service connections are required, everything is already here. 

 

I genuinely have no idea what you're talking about RE roof. It's a trussed roof with no habital space in the loft. If I made the property a true bungalow, the roof would be exactly the same...

[AppleDown]

11 minutes ago, BTC Builder said:

I'm a builder, I've priced everything down to the last wall tie. No service connections are required, everything is already here. 

 

I genuinely have no idea what you're talking about RE roof. It's a trussed roof with no habital space in the loft. If I made the property a true bungalow, the roof would be exactly the same...

You're coming across a little arrogant here. Take a moment and think about what @Marvin is saying. A house with total area (ground and first floor) of 100m2 will have half the roof size of a bungalow with total area of 100m2.

 

And from a materials POV - our 210m2 total area house is coming in at just over £220k for materials. Are you including kitchen, units, solar etc in yours?

Edited Saturday at 20:07 by AppleDown

[BTC Builder]

6 minutes ago, AppleDown said:

You're coming across a little arrogant here. Take a moment and think about what @Marvin is saying. A house with total area (ground and first floor) of 100m2 will have half the roof size of a bungalow with total area of 100m2.

which is completely irrelevant to my original point which was that if I were to halve the size of the house by making it a bungalow, the roof would remain exactly the same and the "cost per sqm" would not halve. 

[Marvin]

Hi @BTC Builder

 

Ignoring the irrelevant stuff..

 

Who's QS has said estimated build cost is £400k-£700k based on their own cost per sqm. Is it the lenders QS?

 

If its the lenders QS, they look at it a different way. From the point of view of protecting the lender. It's all about risk.

 

You say it will only cost £200k by you managing the build and going through the family business. 

They say what happens if, for any reason, you and/or your family business cannot do the work.

 

What cost will it take someone else to complete the building? That's the lenders risk.

 

 

 

 

 

 

 

 

 

 

[Kelvin]

1 hour ago, BTC Builder said:

How much do you think concrete blocks, sand and cement, plasterboard, tiles, concrete, trusses and floor joist cost?

 

There’s a lot more in a house that those elements. I’ve built a house I know how much it all costs down to the screws and nails. 
 

Good luck. 

Edited Saturday at 20:30 by Kelvin