custom build - budget/any advice

[cjackson129]

Hello everyone, my name is Claire and I live with my husband and our 2 young children in South Devon. There is a custom build development locally of 18 plots which should be available to buy in the coming months. Our plan is to buy a plot and build our own home there. We have been researching for many months, got the homebuilder's bible, magazine subscriptions, been to the shows....all the standard stuff. We have had mixed responses to our budget and I was interested to get any thoughts/advice that you may be able to offer....

 

We have some rough figures for the plots (yet to be confirmed) but our total budget minus the plot price will be somewhere in the region of £190k-£240k, this figure will need to cover everything else (professional fees, landscaping, foundations, build, 10% contingency....basically everything else apart from the land). The plots are already serviced. We are hoping to build a 3 bed, open plan living/dining/kitchen, downstairs study, possible small 4th bedroom if possible.

 

My husband works full time, I work part time and look after the children so realistically the time we can dedicate to the project is limited, I am however willing and I am an organised person so I will do what I can. Neither of us have any experience in the building trade though. We have been looking down the kit/package firm route with firms that can provide a fixed price turnkey route as we need to stay within budget. We have however, been advised to use contractors/subcontractors so that we can drive prices down....

 

Anyway, as I said, any thoughts would be gratefully received.

[Nickfromwales]

Hi and welcome  

I think you may be best off with a fixed price weathertight shell package, so you can take stock of yourselves at the weathertight stage and have a breather. If neither of you can be on site daily then you need a contracted package of works which doesnt really need such close supervision or organisation as that will ( should lol ) be in the contracted figure. 

Decide from that point onwards how best to direct your remaining funds, and at that stage, yes, consider engaging individual trades directly for most competitive ( NOT CHEAPEST ) quotes. Its far more bite-sized that way.

[PeterW]

Welcome ..!

 

As a rule of thumb to get some budget plans together, use £1500 per square metre and then work back from there. 

 

This means a 130-160sqm house with a good level of finish and no involvement from you other than picking bathrooms, kitchens etc. 

 

Write a list of must haves and then work those in too - is this a long term home or somewhere you may sell in the next 5 - 10 years..? 

 

If  its long term, focus on getting the running costs down low so look at PV, more insulation, lower bills as they will pay dividends year on year. 

[ProDave]

Hi and welcome.

 

I am aiming to complete my 3 bedroom house for £200K including the land (which is a lot cheaper up here) but suspect that will creep up to more like £220K max. But to achieve that I am doing a lot of the work myself.

 

As above a fixed priced wind and watertight shell would be a good low risk starting point.

[cjackson129]

Thanks everyone for your comments so far. I think a wind/watertight shell is a good idea, we know some reliable sub contractors in the area so would be able to get quotes from them. I will explore this route further. 

 

Once built, we hope that this would be our family home for the long term. Wise advice to get running costs down.

[Triassic]

Maybe worth reading up about a fabric first approach, this should help you achieve a low running cost hone.

 

https://www.designingbuildings.co.uk/wiki/Fabric_first

[ragg987]

£1,500 should be achievable, if the circumstances are right. Beware plots on sloping ground, with no services, demolitions with asbestos or bat surveys.

 

We only had a fixed price on the timber frame, the rest we used local builders or specialist trades. And purchase your own materials rather than supply by builder, I found they pop into the local BM and pick whatever they need at a higher price than I could usually find.

 

[newhome]

Check out all of the rules around the vat claim. For a new build all labour and materials supplied by the builder should be zero rated. Anything you buy yourself will need to be vat paid and part of your vat claim once the house is finished. Don’t let builders purchase materials on your behalf with their name on the invoice as you cannot reclaim the vat. And don’t let builders charge you vat. Definitely worth reading up on the sometimes quirky rules as vat can add up to quite a lot so reclaiming as much as you can is important to manage your costs. 

 

If you purchase materials yourself be aware that you will need extra money to pay the vat on top of your build costs although it can be reclaimed at the end (but HMRC are very slow). 

[recoveringbuilder]

we have just started a 260m2 build for which we have 240k, we have ordered a timber frame kit which includes everything for inside the house, doors windows staircase insulation gyproc etc, the supplier will erect to wind and watertight so no vat on this part of the build, we have employed a small building firm to do the majority of the rest of the work on a labour only basis, we will supply all materials to them that way you can shop around and most builders merchants will give a good discount, the heating and kitchen installation will be done by separate firms but again no vat as they are installing, it’s amazing how hard you will look for bargains when you know you have to, this is our third build and although we feel better prepared this time there’s always something that crops up unexpectedly 

[cjackson129]

Thanks everyone. 

 

Christine - I wonder which timber frame firm you have used? 

[Temp]

Welcome Claire,

 

Sorry if you know all this but... Make sure you do your due diligence checks on the plot. Over the years there have been a lot of scams involving "building plots" that stand no chance of getting planning permission.  In some cases owners end up with land they cant even access to maintain. Essential you use a solicitor of your own choosing and ideally one that has done conveyancing on building plots not just completed houses. Under no circumstances use a solicitor the seller recommends or take up their offer to do the legal work.  Many solicitors, even good ones, never even visit the site so you need to be extra careful to ensure you are buying what you think you are.  If you haven't got a 60m tape measure it might be worth buying one to do your own mini survey to compare with the plans used to register the plot.

[cjackson129]

Temp - thank you, great advice. We have a solicitor in mind already, one which we have used before and I know she has experience in plots. I had wondered about getting a tape measure - will do now. With regards to the credibility of the plots, they're within teignbridge dc who are pushing self build /custom build. The road to the site is already being built, plots will be serviced and the site is being excavated currently. It seems as if they're going for a mini graven hill site, each plot will have its own passport with detailed permission to be granted within a shorter time frame (2 weeks I think). 

[ultramods]

Hi Claire,

 

If you need a mortgage start looking into this ASAP as it can be a long process. Plus there are some extra fees that you will need to budget for such:

• surveyor to value the land/house plans for the lender.
• You might need an indemnity policy (ours is costing £2500)
• site insurance,
• structural warranty.
• Some Mortgage providers will insist that you can't PM the build as you will need to have builder, architect or surveyor PM.
• If you use Buildstore you will need to pay them £600 for their services.
• Then there are then the usual fees related to a mortgage
• lenders do a lot more affordability calculations compared to when i last applied for a normal mortgage. If you are going to be renting and the affordability is tight, try and rent as cheap a place and possible, or live with family/friends.

 

As others have said really look at the fine details of what "Service Plot" means and includes - Could you potentially need to have a site survey, trees felled, soil surveys?

Also what does the Service part include: gas, water, sewage, telephone, gas, and where does the seller run the services to, to the plot boundary, into your house, across a road from your plot? Does the seller pay for any of the connection costs into the services?

 

If you are going to use an Architect watch for the ones that try and charge you x% of the total build cost as this pricing strategy to me is just ridiculous. If i want to have all gold taps I shouldn't have to pay the architect more for that.

 

Again as others have said if you are looking to build a more standard house it might be worth seeing how much of the work the timber frame company can do. Some companies will have standard designs that can be modified or may even design a bespoke house you for. Some can also submit the planning permission and building warrant - which might work out cheaper compared to an architect.

 

In terms of thermal efficiency v heating costs @JSHarris  heat loss spreadsheet calculator is very useful. You can spend 1000s more making your house almost require no heating, however if you only plan to spend 10 years in the house, the extra cost might not be worth it in terms of the additional heating costs for a less insulated house. 

http://www.mayfly.eu/2017/03/energy-consumption/

 

Try and engage with the council sooner rather than later, some councils will provide pre planning advice, they should be able to tell you what they will and wont accept which may save you time and money in terms of not having to revise the design and submit a new planning application because the council rejected the first one.

Edited May 20, 2018 by ultramods

[PeterW]

If you’re in Teignbridge I’m pretty sure @joe90 is just up the road ...

 

And aren’t they the ones who have been put in special measures ..??

[joe90]

1 hour ago, PeterW said:

If you’re in Teignbridge I’m pretty sure @joe90 is just up the road ...

 

And aren’t they the ones who have been put in special measures ..??

 

Yes, we are just outside Bude. We asked for pre planning advise and it was pants!  Our council is Torridge district council and they don’t have a good reputation , we ended up going to appeal and won hands down but it was a two year fight. 

[cjackson129]

Hi Ultramods, thanks for your advice. We will need a mortgage and have moved into rented locally, the rent is a reasonable price and once we're ready to get started we are going to set aside cash to cover 12months rent, we have been advised that some lenders will discount rent payments from the affordability calcs if you have money set aside from the budget. With regards to the finer details on the plots - these are limited at the moment and we'll only get more details once they're on the market - we're very much at the ideas/exploring options/preparation stage at the moment. We are definitely going to explore the timber frame firm constructing to weather tight then arranging sub contractors route - this seems very logical. We have made an appointment to see a local and very reputable architect, mainly to get their perspective on the development, the plots and build route options.

 

We are looking at the plots in Bovey Tracey. As far as I'm aware Teignbridge DC have not been put in special measures, I also have contact with them via my day job and have not heard anything about special measures.

 

Thanks again everyone for your advice, all really helpful and I really appreciate it.

[ultramods]

@cjackson129 Another thing to consider is building using blocks instead of Timber frame. One of the advantages I see of blocks compared Timber Frame is cashflow. With timer frame you need to pay for the timber frame upfront, but at this stage the lender will have only given you money for the land and maybe foundation/slab. Where as with block you should be able to pay the builder more in arrears, however you would need to confirm this as i don't know if the builder would only want payment once the entire shell has been constructed, some may have sub milestones.

[Temp]

On ‎20‎/‎05‎/‎2018 at 17:03, cjackson129 said:

 The road to the site is already being built, plots will be serviced and the site is being excavated currently. It seems as if they're going for a mini graven hill site, each plot will have its own passport with detailed permission to be granted within a shorter time frame (2 weeks I think). 

 

That means they probably have at least outline planning permission. Worth getting that and any other documentation from the planners web site if you haven't already to see if there are any novel planning conditions.

 

You could also consider getting things like a copy of the title deeds from the land registry web site (beware fake web sites). If the land already has an address it's only a few £ and you get it instantly by email. This would include details of any covenants. I suspect the land might not have been divided up yet so the site plan might not tell you much about the plots.

 

If the access road is going to be adopted by the council in the future it will have to be constructed to a certain standard. In some areas it's common for councils to want to wait a year after completion before they will adopt the road. This isn't really something to get too concerned about but you might keep any eye out for it being mentioned in paperwork or get your solicitor to see if there is anything in the sales contract. For example if they are building it now then you can expect kerbs to be damaged by delivery lorries (yours or to other plots) during construction. Lots of mud on the tarmac etc. Ideally the developer should be liable for fixing all this so its in a fit state to be adopted at some point in the future.

 

On the mortgage...  If you are using a mix of cash and mortgage think about which to spend first. For example many mortgage companies release money at fixed stages. If you spend all your cash on the plot then you are tied into the payment schedule the mortgage company wants during the build. If you can use mortgage money to buy the plot and retain cash for the build then you have a great deal more flexibility. The down side is you start paying interest sooner. Some combination or middle way might be best. Sorry if this is obvious but whatever payment schedule the mortgage company insist on you want to agree a similar schedule with the builder. Ideally you want payments to the builder to lag behind the mortgage but be aware some lenders only pay in arrears. eg they only pay out for a stage once that stage is finished. I'm not sure how many lenders will lend against the plot but perhaps others can comment. Consider agreeing to retain a percentage of the build cost for up to a year after completion for snagging etc Our builder allowed us to retain a percentage of each stage payment.

 

On the design front.. Have a think about fitting some sort of whole house vent system with heat recovery. These are becoming increasingly popular with self builders. Allows you to have good ventilation in your well sealed/insulated house without the heat loss of trickle vents.

 

Edited May 22, 2018 by Temp

[ragg987]

On 20/05/2018 at 10:43, newhome said:

Don’t let builders purchase materials on your behalf with their name on the invoice as you cannot reclaim the vat

But if the builder is "supply and fit" this does not matter as the builder should zero-VAT the materials to you.

[newhome]

10 minutes ago, ragg987 said:

But if the builder is "supply and fit" this does not matter as the builder should zero-VAT the materials to you.

 

That’s true but they don’t all understand the rules sadly so can range from wanting to charge you vat on the whole thing to charging you vat on the materials. And when they are employed on a labour only basis and say they will order in the materials you need sometimes they order in their own name meaning that you can’t reclaim the vat as it’s not your name on the invoice. There are so many different ways you can get caught out with the vat reclaim if you don’t understand all of the rules from the get go. 

[Hecateh]

1 hour ago, newhome said:

 

That’s true but they don’t all understand the rules sadly so can range from wanting to charge you vat on the whole thing to charging you vat on the materials. And when they are employed on a labour only basis and say they will order in the materials you need sometimes they order in their own name meaning that you can’t reclaim the vat as it’s not your name on the invoice. There are so many different ways you can get caught out with the vat reclaim if you don’t understand all of the rules from the get go. 

 

This is just one of the issues that this forum has really helped on.  I suspect I did get charged VAT on materials - I didn't get to see original invoices. 

Moving forward, having ditched the builder, I am sure I will pay less for materials.  

[newhome]

Just now, Hecateh said:

 

This is just one of the issues that this forum has really helped on.  I suspect I did get charged VAT on materials - I didn't get to see original invoices. 

Moving forward, having ditched the builder, I am sure I will pay less for materials.  

 

I thought I was really careful about this during the build as I never let trades order anything at all as all but 1 were labour only, but have since discovered that I probably have invoices that won't count because they say 'order', 'proforma invoice' etc. There are no doubt some other anomalies still to hit me too. Had I had the benefit of this forum at that time I probably wouldn't have made that mistake ......  I doubt that all of them can be corrected now due to the age of many of them. 

[vivienz]

Something that's worth having done is a soil survey or ask if the vendor has had one done. My plot is on highly shrinkable, dedicated clay which, broadly, means an extra £20k for me due to more complicated foundations than we had initially thought. Ours is still within our budget ( for the moment) but if things are tight it's better to know before you purchase in case it makes the whole project unaffordable.

[cjackson129]

Sorry I didn't see that there were more comments - thank you. 

 

I will have a look at the land registry website, although as you say - at this stage the land may not be divided up as yet. 

 

I hadn't thought about when the council might adopt the roads, this is something that I will certainly ask about. 

 

As far as financing the project. We are using a mixture of cash and mortgage. I have asked buildstore about how best to approach this and got the impression that with the acelorator mortgages around, it may not make much of a difference. I however was wondering whether to pay for the plot using at least some mortgage with a bit of cash so that, at you say temp, we will have some cash kept aside to keep the build moving... We won't be dictated by the staged mortgage payments etc... I wonder then if we might need to place a deposit, get the planning permission approved, organise mortgage, pay for land with cash and mortgage..... Continue.... 

 

I will definitely read up on vat. 

 

We have been doing more reading around the build to water tight /weather tight option, hiring subbies there after. We have contacted a few timber frame companies in the South West but wondered if anyone could recommend any? 

 

Thanks

[cjackson129]

I will also look into a soil survey, I wonder if the vendor has had one done, particularly as the custom build site is part of a wider new build development.