Curious

How do you value a plot?

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9 hours ago, Oz07 said:

If you are a private individual building a new build as an investment to let out can you not access the vat reclaim scheme? Surely a new build is a new build regardless of the intention?

 

a contractor would zero rate and vat registered developers can reclaim vat

I think you are correct. You would be a business turning over an amount in excess of the VAT threshold. So register as a comany, register for VAT and do quarterley VAT claims. So the cashflow would be much improved over a self builder as they can only make a single claim at the end of the build?

Edited by Tyke2

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4 hours ago, pdf27 said:

Even most of the national house builders aren’t making a huge margin on what they do. If you want to make money, you might well be better off renovating somewhere tatty than doing a new build.

 

 

A major 2-page feature story in the Saturday Times today refutes that statement. Profit per house has nearly doubled over the last 11 years. The article claims this is due to the help to buy Government scheme which triggered new build price inflation.

 

"Help to Buy boom could leave a generation in negative equity", pages 6 & 7.

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2 hours ago, Oz07 said:

If you are a private individual building a new build as an investment to let out can you not access the vat reclaim scheme? Surely a new build is a new build regardless of the intention?

 

a contractor would zero rate and vat registered developers can reclaim vat

 

No you can’t use the reclaim process as to claim via this process the home must be for you to live in as below. You are quite right about the position if you used a contractor however, but you can’t reclaim VAT on the purchase of materials if you want to DIY or use a builder that isn’t VAT registered. The claim form asks for the date you occupied the property. If you never occupy the property they may well find out. 

 

New homes

The home must:

  • be separate and self-contained
  • be for you or your family to live or holiday in
  • not be for business purposes (you can use one room as a work from home office)

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15 hours ago, epsilonGreedy said:

 

A major 2-page feature story in the Saturday Times today refutes that statement. Profit per house has nearly doubled over the last 11 years. The article claims this is due to the help to buy Government scheme which triggered new build price inflation.

 

"Help to Buy boom could leave a generation in negative equity", pages 6 & 7.

Interesting, thanks - I hadn’t seen that article. That’s what, 15-20% margin they’re making on the sales price? Given the economies of scale they have most of us would struggle to make a profit at all I suspect.

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A major developer will have a 18% to 22% ish profit margin, plus around 6% overhead. They will build significnatly cheaper than a self build though, through scale of each site and national buying power. For instance I remember getting 60% off of list for tiles from a big supplier using my companies account.

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13 hours ago, pdf27 said:

Interesting, thanks - I hadn’t seen that article. That’s what, 15-20% margin they’re making on the sales price? Given the economies of scale they have most of us would struggle to make a profit at all I suspect.

 

I think that the days when self-builders could save a lot of money by self-building have well and truly passed, with the exception of those lucky enough to get a bit of land through family connections, or those who put in a great deal of their own effort into building their home, with their own labour.

 

Plot prices for single plots seem to have risen to a level well above those that developers are paying for multi-plot sites, perhaps double, or even three times, the price, self-builders have to bear the whole cost burden for things like environmental and protected species surveys, flood risk assessments, etc, whereas developers can amortise those costs over the whole development.  The only real cost break that self-builders get is the exemption from CIL, and often Section 106 contributions as well  Add in that self-builders can't really get the best prices for either materials or labour, as they are just not in such a good position to negotiate, and I think that the main reason for self-building now has to be to get as close to the house you actually want, rather than have to accept someone else's design and construction compromises.

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