First time buyer

[ElliotS]

Hi all,

 

New member joining the forum but have kept a close eye on and off for the past few months, a lot of great knowledge from people here so I am pleased to be a part of it.

 

I am 21 and about as ambitious as they come. As the title suggests, I am a first time buyer/builder. I would love to build my first house with my partner. however, as for most people, budget is a constraint and so is getting a mortgage. Although, I am very close friends with a mortgage broker and he thinks I will be just fine securing one. I know that self-build mortgages are different than usual and I am currently in contact with a self build mortgage advisor who is great and keen to help me. 

 

I have a total budget of about 150k to 160k including land. Land in my area (North Staffordshire) is not cheap nor openly available, but I am considering posting a few letters to local farmers with fields and neighbours with big gardens. I am aware of the different types of land i.e agricultural but I'm not sure if this can be converted to residential? There is a piece that is available that has got planning permission for a 3 bedroom bungalow but its listed at 85K! I want to know if I am aiming too high or if it would be possible to do with suggested building methods from you guys. I have been in contact with Potton and few others, I am aware there is a slight difference between SIP's and timber frame so I apologise if this is in the wrong thread.

 

Within my family and very close family friends we have joiners, plumbers, electricians and just about all other trades you can think of. I have access to diggers, dumper trucks etc free of charge.

 

We would be happy with a 2 or 3 bedroom bungalow, but we do like the idea of open plan living and kitchen space. I would welcome any suggestions for all types of houses if you think one would be more cost effective than another. My partner is a mobile hairdresser too so a small hair/utility room for her to work in would be ideal.

 

I look forward to your replies and thank you in advance for your replies. sorry if I have been vague about anything and I appreciate this is a challenging ask, I'd appreciate your honest opinion.

 

Thanks again

Elliot

[ultramods]

You will likely need 20% - 25% deposit to obtain a self build mortgage.

 

My parents built 180 sqm timberframe bungalow in the Highlands for around £800 psm around 7 years ago. That was with a builder, joiner, electrician and plumber doing most of the work, the frame was stick built on site. So it is possible to build cheaply, however a lot depends on the cost of labour in your part of the country. 

 

The problem you have building a small house compared with a larger house in terms of cost per square metre is you still have a planning, architect , Service connection , Kitchen , bathroom costs etc. Don't ignore these costs, for my self build professional costs and service costs are around 25-30k and that's with all the services being within 5 metres of my boundary.

 

Another important thing to consider is, what is the final value of the house going to be, could you buy a similar house for the same or less? 

 

If you are ambitious and want to climb the property ladder, buying and living in some older properties that need renovating might be a better idea to start with.

[ElliotS]

37 minutes ago, ultramods said:

You will likely need 20% - 25% deposit to obtain a self build mortgage.

 

My parents built 180 sqm timberframe bungalow in the Highlands for around £800 psm around 7 years ago. That was with a builder, joiner, electrician and plumber doing most of the work, the frame was stick built on site. So it is possible to build cheaply, however a lot depends on the cost of labour in your part of the country. 

 

The problem you have building a small house compared with a larger house in terms of cost per square metre is you still have a planning, architect , Service connection , Kitchen , bathroom costs etc. Don't ignore these costs, for my self build professional costs and service costs are around 25-30k and that's with all the services being within 5 metres of my boundary.

 

Another important thing to consider is, what is the final value of the house going to be, could you buy a similar house for the same or less? 

 

If you are ambitious and want to climb the property ladder, buying and living in some older properties that need renovating might be a better idea to start with.

Thank you for your prompt reply.

 

I had considered service costs but I aren't sure what they would be as the land is actually the back of somebody's garden, not sure if this would make a difference?

 

we have looked at purchasing multiple houses that need renovating but we are struggling to find something we like to renovate. The idea is to build and live in it for as long as possible but I'm not sure if its jumping in a little too deep.

[ultramods]

3 minutes ago, ElliotS said:

Thank you for your prompt reply.

 

I had considered service costs but I aren't sure what they would be as the land is actually the back of somebody's garden, not sure if this would make a difference?

 

we have looked at purchasing multiple houses that need renovating but we are struggling to find something we like to renovate. The idea is to build and live in it for as long as possible but I'm not sure if its jumping in a little too deep.

 

That is the other thing I forgot to mention in terms of land and land costs. Don't assume that because it's part of someones garden that you would be able to build on it. Especially if it's in the country, you may find that the one of the previous house owners bought some neighboring agricultural land to make their garden bigger. Also in terms of agricultural land I would imagine that unless the land has an existing or derelict building on it you will struggle to get planning permission. 

 

What you could try and do is come to a contractual arrangement with a landowner which states that if you manage to get planning permission for a part of their land within x amount of time they will sell it to you for Y. Applying for planning in principle doesn't cost too much, however I would only do this if you know you will have the funds for the land and you are confident that you will get planning permission.

 

If you are ambitious you may well find that you will grow out of a house build for £80,000 pretty quickly as it will be small and basic. 

 

If you are looking at renovations to live in (short term), don't look at them as homes but rather as investments.

 

When I was your age I had a budget of £95,000 for a flat in Aberdeen, I spent 3 - 6 months trying to buy a flat in a nice area, however I kept losing out to higher bids, all the while property prices were increasing. In the end I bought a flat in a less desirable area that needed renovating., I lived in it for 2 years and did most of the work myself and made 30k profit when I sold it. 

[ElliotS]

3 minutes ago, ultramods said:

 

That is the other thing I forgot to mention in terms of land and land costs. Don't assume that because it's part of someones garden that you would be able to build on it. Especially if it's in the country, you may find that the one of the previous house owners bought some neighboring agricultural land to make their garden bigger. Also in terms of agricultural land I would imagine that unless the land has an existing or derelict building on it you will struggle to get planning permission. 

 

What you could try and do is come to a contractual arrangement with a landowner which states that if you manage to get planning permission for a part of their land within x amount of time they will sell it to you for Y. Applying for planning in principle doesn't cost too much, however I would only do this if you know you will have the funds for the land and you are confident that you will get planning permission.

 

If you are ambitious you may well find that you will grow out of a house build for £80,000 pretty quickly as it will be small and basic. 

 

If you are looking at renovations to live in (short term), don't look at them as homes but rather as investments.

 

When I was your age I had a budget of £95,000 for a flat in Aberdeen, I spent 3 - 6 months trying to buy a flat in a nice area, however I kept losing out to higher bids, all the while property prices were increasing. In the end I bought a flat in a less desirable area that needed renovating., I lived in it for 2 years and did most of the work myself and made 30k profit when I sold it. 

The land that is for sale as part of someone's garden has full planning permission for a 3 bed bungalow that looked a good size but the land cost listed at 85K would cut our budget for the house build itself.

 

You make an interesting point about the contractual agreement, the problem is that the land would have to be cheap enough to leave enough funds for the build. all very confusing for someone starting out, but I love the learning side.

 

I previously put an offer in on a small bungalow which sat on about 0.4 acre of land but it needed pretty much stripping back and re-doing, the entire back garden needed doing and overall it needed a lot of money throwing at it. The owners had inherited it recently from their parents but would only accept a price that fully modern versions of the same house we going for in the  street. It's already been to auction twice without success because they won't move on the price.

 

Maybe building should be put on the back burner for a few years until I have a higher budget. I just can't get the idea out of my head!!

[ProDave]

This post reminds me of where I was in 1986 living in Oxfordshire.

 

I had the chance to buy a building plot for £20K with a derelict wooden bungalow on it.  But nobody would lend me the money to buy the land. Plenty said they would lend the money to build a house if I could buy the land, but I could not afford it.  So I ended up buying the cheapest 1 bedroom starter home in the county for £36K

 

Another chance passed me by a few years later when a lovely plot on a hill came up for £40K, again with a burnt out remains of a wooden bungalow, but still not enough equity to buy it.  Then plot prices (for the very few that ever came on the market) went silly.

 

It was not until 20 years later when we moved to the Highlands that I was finally able to buy a plot and build a house, this time with no mortgage at all.  I am now well on in the process of building the next, and almost certainly the last one.

 

Best of luck finding a plot, that is the crux of the issue.

[AliMcLeod]

8 minutes ago, ElliotS said:

Maybe building should be put on the back burner for a few years until I have a higher budget. I just can't get the idea out of my head!!

 

I suspect this is where you'll end up. Realistically, even if you and your friends are willing to do a lot of work yourself, you'll need cash (including mortgage) to cover the plot cost plus around £1000 per m2 of house you want to build. This may also give you some contingency if you really are doing a lot of the work yourself.

Edited March 21, 2019 by AliMcLeod

[ElliotS]

2 minutes ago, ProDave said:

This post reminds me of where I was in 1986 living in Oxfordshire.

 

I had the chance to buy a building plot for £20K with a derelict wooden bungalow on it.  But nobody would lend me the money to buy the land. Plenty said they would lend the money to build a house if I could buy the land, but I could not afford it.  So I ended up buying the cheapest 1 bedroom starter home in the county for £36K

 

Another chance passed me by a few years later when a lovely plot on a hill came up for £40K, again with a burnt out remains of a wooden bungalow, but still not enough equity to buy it.  Then plot prices (for the very few that ever came on the market) went silly.

 

It was not until 20 years later when we moved to the Highlands that I was finally able to buy a plot and build a house, this time with no mortgage at all.  I am now well on in the process of building the next, and almost certainly the last one.

 

Best of luck finding a plot, that is the crux of the issue.

If only land was 20k now! I am very lucky in that I have more than I can mortgage in available funds from other sources, its one thing less to worry about. I want to avoid doing this as I'd like to do it the 'proper' way without relying on anything else, its just an offer that has been put forward to me.

 

I just really like the idea of designing and building a home that isn't using standard brick and block.

 

Thank you, I feel luck is very much what I need haha.

[ElliotS]

9 minutes ago, AliMcLeod said:

 

I suspect this is where you'll end up. Realistically, even if you and your friends are willing to do a lot of work yourself, you'll need cash (including mortgage) to cover the plot cost plus £1000 per m2 of house you want to build. This may also give you some contingency if you really are doing a lot of the work yourself.

I think you are right. Nevertheless, until all avenues are blocked, I am going to be optimistic and try to achieve my goal. I am really organised with all things cash, I'll never put myself in a situation I can't come out of better off, I don't care if it takes me years before the time is right.

 

I appreciate you taking the time to voice your opinion, it helps a lot.

[recoveringbuilder]

I had considered service costs but I aren't sure what they would be as the land is actually theback of somebody's garden, not sure if thiswould make a difference?

our current plot was part of our garden and had an electricity pole on site which made us think that the connection would be simple and cheap however it turned out that there was no capacity for another dwelling and we were presented with a quote of almost £25k for electricity connection, after a long fight with them we eventually got it reduced but where I am going with this is don’t be fooled into thinking because there’s a house there already that everything should be straightforward.

I do admire your ambition however and hope you can eventually pull it off, we were in our early thirties when we built our first house and we now have a son who is that age who wouldn’t even consider a self build so good on you, I wish you luck 

[newhome]

Maybe you could consider doing things over a longer time period. Buy a plot on which you could site a static caravan, live in the caravan and take things very slowly in terms of progressing the plans for the build, getting services connected, then the foundations, and so on, saving up as much money as you can along the way. If you are going to rely on help from friends and family, spreading the build out over a long period should prevent them from feeling taken advantage of too. 

 

[ProDave]

That's a good plan as long as you have "started" there is no time limit.  This is probably what I would have done all those years ago if I had been able to buy that £20K plot

[ElliotS]

13 hours ago, Christine Walker said:

I had considered service costs but I aren't sure what they would be as the land is actually theback of somebody's garden, not sure if thiswould make a difference?

our current plot was part of our garden and had an electricity pole on site which made us think that the connection would be simple and cheap however it turned out that there was no capacity for another dwelling and we were presented with a quote of almost £25k for electricity connection, after a long fight with them we eventually got it reduced but where I am going with this is don’t be fooled into thinking because there’s a house there already that everything should be straightforward.

I do admire your ambition however and hope you can eventually pull it off, we were in our early thirties when we built our first house and we now have a son who is that age who wouldn’t even consider a self build so good on you, I wish you luck 

Thank you for sharing your interesting experience, I guess I was being a little naïve at the service cost. Is it a big job for them to do or is it a just another way for them to get bags of money easily? also, how long does it take for services to be connected?

[AliMcLeod]

3 minutes ago, ElliotS said:

Is it a big job for them to do or is it a just another way for them to get bags of money easily? also, how long does it take for services to be connected?

 

I'm afraid the only correct answer to this is "it depends". Part of your pre-work before making an offer on any plot should be whether services exist at/close to the plot, whether you can connect to them and what it would cost if not. If not, you can easily be quoted £10K (or multiples of) for getting them to your plot - read the blogs here for examples.

 

You should contact the local service providers to ask. In many cases, the costs will be reasonable, but there's always those edge cases...

 

Edited March 22, 2019 by AliMcLeod

[ElliotS]

13 hours ago, newhome said:

Maybe you could consider doing things over a longer time period. Buy a plot on which you could site a static caravan, live in the caravan and take things very slowly in terms of progressing the plans for the build, getting services connected, then the foundations, and so on, saving up as much money as you can along the way. If you are going to rely on help from friends and family, spreading the build out over a long period should prevent them from feeling taken advantage of too. 

 

I hadn't considered this as an option and I wouldn't write it off either. The luxury me and my partner have is that we both still live at home without any costs other than personal things. Do you think it could be worth purchasing the land and extending the build out over perhaps a 2 year period to spread the cost, do a little bit at a time? this way it would allow for earning to be dedicated to certain parts of the build maybe? We wouldn't be borrowing money from friends or family.

[AliMcLeod]

Just now, ElliotS said:

Do you think it could be worth purchasing the land and extending the build out over perhaps a 2 year period to spread the cost, do a little bit at a time? this way it would allow for earning to be dedicated to certain parts of the build maybe?

 

That is certainly an option, but do be aware of the potential gotchas when it comes to VAT reclaim. HMRC seem to have changed tact in how they approach VAT reclaims with respect to the 3 month time limit in the "rules"

 

See this thread:

 

https://forum.buildhub.org.uk/topic/8965-diy-claim-rejected-as-claim-submitted-too-late/

[ElliotS]

6 minutes ago, AliMcLeod said:

 

I'm afraid the only correct answer to this is "it depends". Part of your pre-work before making an offer on any plot should be whether services exist at/close to the plot, whether you can connect to them and what it would cost if not. If not, you can easily be quoted £10K (or multiples of) for getting them to your plot - read the blogs here for examples.

 

You should contact the local service providers to ask. In many cases, the costs will be reasonable, but there's always those edge cases...

 

That is something I will certainly look at doing. Is there not a grey area for requesting information on property that isn't yours?

[AliMcLeod]

6 minutes ago, ElliotS said:

That is something I will certainly look at doing. Is there not a grey area for requesting information on property that isn't yours?

 

I can't see why there would be an issue - you could even phrase things in generic terms. eg, connecting to services at a certain postcode.

Or, you push the issue to the vendor - ask them to confirm whether services are available on the plot, and/or adjust your offer price to take the response into account. The issue here, of course, is that a plot with confirmed services may be worth more to the vendor than one without.

[ElliotS]

6 minutes ago, AliMcLeod said:

 

That is certainly an option, but do be aware of the potential gotchas when it comes to VAT reclaim. HMRC seem to have changed tact in how they approach VAT reclaims with respect to the 3 month time limit in the "rules"

 

See this thread:

 

https://forum.buildhub.org.uk/topic/8965-diy-claim-rejected-as-claim-submitted-too-late/

Thank you for the link but it says I don't have access to the folder?

 

Is there a time constraint to build the house or is it a restriction on time after materials are purchased to reclaim VAT? I thought I saw it was 3 months after completed build?

[ElliotS]

Just now, AliMcLeod said:

 

I can't see why there would be an issue - you could even phrase things in generic terms. eg, connecting to services at a certain postcode.

Or, you push the issue to the vendor - ask them to confirm whether services are available on the plot, and/or adjust your offer price to take the response into account. The issue here, of course, is that a plot with confirmed services may be worth more to the vendor than one without.

I have requested information on any pre-existing services but not had a response as of yet.

[AliMcLeod]

12 minutes ago, ElliotS said:

Thank you for the link but it says I don't have access to the folder?

 

This is one for the mods - i believe some folders are locked down until people have a certain number of posts or have been registered for a period of time.

 

12 minutes ago, ElliotS said:

Is there a time constraint to build the house or is it a restriction on time after materials are purchased to reclaim VAT? I thought I saw it was 3 months after completed build?

 

The question is what does "completed build" mean? Or moreso, what does HMRC think it means. It was typically seen by self-builders as the date of the completion certificate, but it seems that HMRC have been looking at, for example, the date someone moved in (whether "legally" habitable or not) and stating the house was complete at that date so the reclaim must have been submitted within 3 months of that date. Let's see if the mods can get you access to that thread so you can read further.

 

 

Edited March 22, 2019 by AliMcLeod
Clarified as per newhome comment below.

[recoveringbuilder]

8 minutes ago, ElliotS said:

That is something I will certainly look at doing. Is there not a grey area for requesting information on property that isn't yours?

We are currently marketing two plots and someone is interested in one of them, they are currently in talks with the local council about what type of property they want to build and all before even making any kind of offer so I don’t think you would have any problem there.as for your other questions about services, in our case it was a big job bringing in a new supply from nearly 300m away although I still couldn’t see where all that money was in it and it took6 months before we got it but that was because I fought them on price if I’d paid up immediately it would have been done much quicker 

[newhome]

2 minutes ago, ElliotS said:

Thank you for the link but it says I don't have access to the folder?

 

Is there a time constraint to build the house or is it a restriction on time after materials are purchased to reclaim VAT? I thought I saw it was 3 months after completed build?

 

That folder is restricted to regular members. You will have access to it soon if you keep posting ?. 

 

There is no time constraint but HMRC appear to have changed the goalposts if you move into the property and finish it off whilst you are living there. That shouldn’t be an issue if you are living off site and anyway by the time you get to that stage I imagine that the HMRC move of goalposts should be clearer. 

[Ferdinand]

7 minutes ago, ElliotS said:

Thank you for the link but it says I don't have access to the folder?

 

Is there a time constraint to build the house or is it a restriction on time after materials are purchased to reclaim VAT? I thought I saw it was 3 months after completed build?

 

i think you perhaps just need to be logged in, though I was not aware that that was one of the Members Only areas.

 

F

[newhome]

3 minutes ago, AliMcLeod said:

The question is what does "completed build" mean? Or moreso, what does HMRC think it means. It was typically seen by self-builders as the date of the completion certificate, but it seems that HMRC have been looking at, for example, the last date of any VAT reclaim invoice and stating the house was complete at that date so the reclaim must have been submitted within 3 months of that date. 

 

It seems to be more to do with occupying the house whilst finishing off currently. HMRC seem to be stating that you are thus agreeing that the house is habitable and ‘complete’.