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Self build your way to a property fortune

Here’s how to make some spectacular gains in the housing market

A garage round the corner from me was sold for £170,000 the other day. It is not a big garage, in fact it is barely 29ft deep by 15ft wide, though it can hold two cars.

The inside is tatty: the concrete floor is badly rutted, the brick walls are bare and crumbling and the roof leaks in several places.

What makes this garage so valuable is not its location – we live in an area in Camden, north London, known locally as “Murder Mile” – but the fact that it was sold with planning permission for a two-floor work/live residential property on the site.

The price paid is a reflection of a small but important sidebar to the housing boom of the past two or three years, namely a sharp rise in the number of self-build properties throughout the UK.

Last year, for example, more than 50,000 self-build projects were completed, more than the total number of new properties actually erected by commercial housebuilders.

Why self-build?

The attraction of self-build is simple: it offers the chance to create the house of one’s dreams cheaper, or to a much higher specification than if bought from a developer.

Alternatively, for the more commercially-minded, it can deliver ‘instant’ gains after construction, of 20% or more above the normal price increases enjoyed by the property market in recent times.

Taking the example of the garage above, local architects I have spoken suggest the build cost will come to £75,000-£100,000, as long as the ‘spec’ is not too outrageous.

An estate agent in the area suggests the property might eventually reach £350,000, a tidy profit of £80,000 or so on the combined purchase price and build cost.

No wonder more and more people are deciding to join in the market. If you want to take part, here are some points to consider.

What kind of person are you?

If you have a vast range of DIY skills, all the better. You can do loads of the work and save money.

But actually, you don’t need them: it is possible to sub-contract every aspect of the build process to others, though that means sacrificing some of the potential gains.

The human qualities you will need most of all are:

Incredible patience – these projects always take much longer to complete than first imagined

The planning skills of a three-dimensional chess player – if you “self-manage”, juggling between suppliers and builders will be supremely challenging.

Let’s assume you have both these qualities in abundance. What next?

Read a lot

You will need to get a feel for what is involved. The only way to do it is to read books and magazines covering the subject, as well as going to a number of self-build fairs where you can talk to the professionals and even attend seminars.

There are three monthly magazines widely considered as essential reading for any self-builders.

SelfBuild & Design

Build It

Homebuilding & Renovating

All three magazines are fascinating reads – if you’re into this kind of thing - and their websites carry a mass of useful information.

They also have – and this is vital – lots of heart-warming stories of people who managed to build their dream homes against all the odds, saving tens of thousands into the bargain.

Find a plot

This is the difficult bit. You should go to surveyors, estate agents and auction houses in the area you are interested in. Also worth talking to are local authorities, church bodies, even utility companies.

There are a number of online services that may be of use:

BuildStore, a building supplies site, has PlotSearch

Property Spy, which specialises in land in England

PlotFinder, which is part-owned by one of the three magazines above

SelfBuild Plot Browser, also part of one of the magazines above

All three also have articles on what to look for and on some of the pitfalls to avoid. You will have to register and pay a fee, or subscription to use them.

Here are two tips worth bearing in mind:

1) When making an offer on a plot, always work out how much you will have to pay for the actual build process – and then add another 10 or 20 per cent. If the price of the completed property is still at least 20 per cent less than a comparable one from a builder, you have a bargain.

2) You don’t have to find an empty plot. Many houses are on land that would be worth much more with a modern – perhaps larger and more attractive – property.

Estimating build costs

Here are several ways of doing this:

Rule of thumb: base it roughly on an estimated £50 per square foot, or £450 per square metre. This includes walls. For high specification houses (swanky bathrooms and kitchens, lots of hardwood, stone and glass) go up to £650 per square metre. Beware of problems on the site, which can add thousands to the final cost.

Be cheeky: ask a builder to quote for the work and then deduct 15% for doing it yourself. Or split the work into each trade job and ask for quotes for each item of work (harder, but more accurate).

The hard way: go through a builder’s price guide (Spon’s Builder’s & Architect’s Price Book, £69.50), available in all central libraries.

You can also try Mark Brinkley’s The Housebuilder’s Bible. Having read this book a few years ago, I think it’s superb.

TIP: most builders won’t be doing as much shopping around for their supplies as you might think: for them TIME is money, not materials.

By sourcing supplies more cheaply yourself, you could shave up to 5% per cent off total build costs.

Sort out the finances

There are a number of different areas to consider:

The mortgage: the biggest problem is often that of finding a lender that will agree to a mortgage in “stage payments”, allowing you to pay as each part of the house is built. If you have money towards the land and some of the build costs, that will be a big help.

That said, here is a list of lenders that can help, with details of their mortgages available to self-builders.

Most existing online mortgage finders won’t be able to help find a mortgage. But Charcol, which combines a mixture of online and telephone-based advice, will.

The short-term loan: there will be times when you are paying literally several thousand pounds of week to tradespeople and suppliers for items or services you need. No staged mortgage will be able to cope with all of this.

Be prepared to go to your bank. Alternatively, you may want to use a combination of interest-free credit cards deals and similar lines of cheap credit to temporarily fund the build project.

The insurance:

some of this is specialised stuff. You will need four types of cover –

Site insurance to cover against public liability, theft or damage from the site and employer’s liability. You may also need legal expenses cover – if work turns out to be defective, you may need to take action against your builder

Structural warranties: this is protection against long-term failures in the work carried out to your house and will help when you sell the property on, as it protects for a fixed number of years after the building is completed.

There are specialised insurers who offer these services and it would be invidious to mention them now – you’ll find out their names soon enough.

Saving on the VAT

Let’s assume that you have managed to find land, come up with an architect’s drawing, it was approved by local planners, you worked out the costs, found builders and are ready to start.

How can you save several thousands more pounds? Think of the VAT angle. Here are a few tips:

Building work is normally subject to VAT at 17.5%. But not new buildings. However, you can only claim once: all work AFTER you have submitted a claim for a refund will be liable to full VAT.

If you use non-VAT registered builders you won’t be charged VAT on their labour.

Landscaping for new buildings is also zero-rated for VAT purposes, as long as it is carried out at the same time as the main build itself.

Listed buildings, residential conversions, renovations of empty buildings are zero-rated.

If you demolish and rebuild you will also be zero-rated.

For details of this and other money-saving ideas, go to the site.

Or try the Customs & Excise site for more information


There is no question: you can make money out of self-build. But it does take time and organisational skills. If you have both, you could be on your way to becoming property billionaire.

As for me, I’ve just re-plastered the ceiling and laid a new floor to my own garage. Any takers?


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Please note that articles on this site do not constitute regulated financial advice, which recommends a course of action based upon the specifics of your personal circumstances. The articles are intended to provide general personal financial information. We urge you to consult an Independent Financial Adviser (IFA) before making any important decisions about your finances. Call 0800 085 3250 for details of IFAs in your local area. Any statement regarding financial services products and tax liability is based on legislation and tax practices as at 1 January 2004, which is, of course, subject to change.The value of any tax benefits or reliefs depends upon the individual circumstances of the investor.When investment performance is mentioned you should remember that past performance is no guarantee of future performance. Where products have an underlying investment content, in many cases the value of the investment can fall as well as rise. For with-profit based investments, there is no guarantee as to the level of bonuses that will be declared, if any. Where mortgages or secured loans are explained do remember that your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it. All mortgages are subject to underwriting, status and are not available to people under the age of 18.

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Schedule of Articles

property investing
property refurbishment
buying overseas property
moving house
home letting
buy to let
home improvements

top 10 celebrity areas
6 up & comming areas
5 signs that an area is up & comming
city types yearn for the country in town
your place in the sun
equity release
planning permissions & extensions
estate agents
rent or buy
buy to let
mortgage overpayment
mortgage endowments
mortgage protection
stamp duty
self build your home
electrical surveys
the cost of moving in
the perfect neighbourhood
council tax
house price league
good neighbours
stamp duty land tax
top 20 towns 2003
cut the cost of moving
interest rates
buying in scotland
dream homes
first time buyers
the worth of uk homes
bad estate agents
keeping up appearances
home improvements


Please note that articles on this site & any other 'planning-approval' related web site does not constitute professional advice. All articles are intended to provide a general view of many subjects. We suggest you to consult a solicitor before making any important decisions.  The author is not an expert in any given field.

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