Building your own house
By Stephen Maunder
Building your own house
Learn about the basics of building your own house, including how to finance a self-build or custom-build home.
Whether you've got your heart set on a grand design or are simply looking for something unique to call your own, building your own home doesn't need to be an impossible dream.
With the government targeting 20,000 self-built or custom-built homes per year by 2020, steps are being taken to remove some of the hurdles faced by would-be housebuilders.
Councils must now keep 'Right to Build' registers and help people secure plots, and lenders are being encouraged to provide more specialist mortgages for self-build projects.
If you're ready to dig your own plot and get your hands dirty, or simply want to get your head around the jargon, you can learn about the basics of building your own home here. Hit the links below to find out about:
- Right to Build
- Self-build, custom-build and modular homes
- The pros and cons of building your own home
- Financing a self-build project
- Building your own home: step-by-step
- Financing a self-build project can be a daunting process. To get some impartial, expert advice on your mortgage options, call Which? Mortgage Advisers on 0808 252 7987.
Right to Build - how does it work?
Finding the right plot of land can be a major obstacle for people looking to build their own home.
The government is taking steps to make this process easier, by demanding that councils keep Right to Build registers, containing the details of anyone who has expressed an interest in a self-build project.
Once you've signed up to a register, the onus is on your council to find you a suitable serviced plot within three years.
Right to Build registers: are there any restrictions?
At this stage, the registers are only compulsory for councils in England, and only EU or EEA citizens aged 18 or over can sign up.
To help manage demand, some councils may add additional criteria to their registers. For example, you might need to already live or work in the local area to get priority.
Right to Build: what is a serviced plot?
A serviced plot is a piece of land that has electricity, water and waste water connections, and access to a public road.
Right to Build: will I get a suitable plot?
This depends on various factors - including your location, your local council, and your individual needs.
In many areas, plots are likely to be on brownfield land that has been identified for redevelopment - which naturally wouldn't be suitable for self-builders looking for a countryside plot with a few acres of land.
This means it's best to treat the Right to Build register as one of several options, rather than relying entirely on it.
Right to Build: what are the alternatives?
While residential property portals occasionally list plots of land for sale, they're unlikely to be your best option.
Online resources such as the Self Build Portal, PlotBrowser and Plotfinder are popular choices with self-builders.
It's also worth asking your local council about land where planning permission has been granted but no building has taken place.
Self-build, custom-build and modular homes: what's the difference?
Self-build and custom-build are terms that are often used interchangeably. Here's a quick explanation of how they differ.
Self-build projects usually involve a more hands-on approach, where you buy a plot, prepare it and organise the design and construction of the home yourself.
This can mean getting your hands dirty and physically taking on some of the building work yourself, or managing contractors to take care of each aspect of the project.
Custom-build involves working with a housebuilder to deliver your home.
You will usually buy a plot of land on a development and work with the developer to create the right design, and they will take on the building project.
The main benefit of custom-build is you can still get the bespoke design you want (or at the very least you can choose between various designs), without facing the stresses of obtaining planning permission or directly managing the project yourself.
Modular homes and kit homes
The government is now taking a greater interest in modular (factory-built) homes as it looks to solve the housing shortage.
The term 'prefab' often has negative connotations, but with modern technology it's possible to create factory-built homes (or modular elements of homes) to the same standard as those put together on-site.
In theory, factory-built elements are subject to greater quality control (meaning fewer snags) and can be created at great speed and volume.
Builders considering going the full distance and choosing a 'kit home' will find plenty of options on the market, from timber-frame packages to more bespoke eco-friendly designs.
Building your own home: the pros and cons
Choosing whether to build your own home isn't an overnight decision, but there are some basic things to consider which might help you decide whether self-build and custom-build are right for you.
- Building your own home is usually considerably cheaper than buying a property from a developer
- If you budget correctly, your finished home could be worth around 20% more than its combined land and build cost
- You'll be able to choose your own design, fixtures and fittings
- You can create a more energy-efficient home, which will be cheaper to run
- You can reclaim VAT on your labour and material costs
- Stamp duty is charged on the cost of the land rather than the the value of the finished home
- Finding the right plot can be difficult, even with government help and relaxed planning restrictions
- You'll need somewhere to live while building the property, so you could find yourself paying for two homes
- Managing the project can be a stressful and time-consuming experience, as you will need to work with various contractors at the same time
- With mortgage funds being released in stages, cash-flow can be an issue if you don't have significant savings beyond the up-front costs
How to finance a self-build project
One of the biggest challenges of self-build is finding a way to make your project financially viable.
Unless you've got lots of savings or are selling your current home to fund the project, you'll need to get a specialist mortgage.
How do self-build mortgages work?
Self-build mortgages are offered by specialist lenders, as well as some mainstream banks and building societies.
With self-build mortgages, you'll usually receive your funds at different stages of the build process.
A valuer will visit you at the end of each major stage before the money is released, which can cause issues with cash-flow if you don't have some extra money set aside.
While some lenders do offer traditional 'advance' mortgages to self-builders, these are less common.
Self-build mortgages usually require a high deposit - in some cases you'll only be able to borrow around 75% of the cost of the land and 60% of the cost of the build.
Building your own home: step-by-step
- Find a suitable plot for your project
- Arrange a mortgage or alternative finance
- Set a clear and realistic budget, allowing some breathing space in case costs increase
- Find someone to design your home
- Look into your planning options and get some pre-application advice from your local authority before submitting your application
- Decide on a building method - are you going to manage the project yourself or use a package company?
- Get planning permission, building control approval and any special insurance your project requires
- Prepare your plot
- Build your home
- You're now ready to move in. Obtain your completion certificate, check the home is snag free and reclaim your VAT within three months of completion
Last updated: March 2017
Updated by: Stephen Maunder