Self-building your own home can be a fantastic investment. The potential returns are far greater than can be achieved from buying an existing property. This potential comes with greater risks, however.
Planning, financing, and constructing a new property comes with a set of unique challenges, and the financial strain and physical stress they cause have made many self-build projects flounder.
Before you begin looking at plots of land and researching building contractors and architects, think long and hard about the road ahead of you. Here are some things that anyone thinking of constructing a self-build home should know.
Plan For Paperwork
There is going to be a vast amount of paperwork to deal with if you are going to build your own home. Before you begin any build, you should have a plan in place to help you manage it all and keep everything organised.
Planning permission from your local authority will be one of the first paperwork hurdles you will need to clear. Every local council is unique, though many follow a similar process. You may have to complete several surveys and assessments on the land you wish to build upon before you can break ground.
In recent years many new laws and regulations have come into effect that housing developers and private builders need to know about. The Environment Act of 2021 brought in several changes and new responsibilities for land developers, including assessing the impact a build will have on the biodiversity of the area around the property. This is not only to assess the impact of the building process, but also the building itself and the effect it will have on the local environment during its lifetime.
With the help of ecological consultants like Biodiversity Net Gain Plan, both small-scale private house builders and large private developers can ensure that their building process and the final construction have a minimal impact on the environment around them.
Self-Builds Need A Lot Of Self-Finance
Building your own home can be a fantastic financial investment, with huge long-term returns possible. The financing you arrange for your self-build will have a massive impact on how successful the home is as an investment. You need to plan your property’s financial future before you can begin building.
If you have a significant amount of savings to help finance your build, you will be in a strong financial position throughout the project. Mortgages for self-build properties are more complicated than the mortgages you might be used to.
The money is often raised in stages, as different levels of the build progress. This can often put a financial strain on the project. Meeting the requirements for the next level of funding can often require additional personal investment to cover costs until the next tranche of money is released. Many home buyers will have 10-25% of the value of the property in savings or equity when buying a home to use as a deposit.
For a self-build property, mortgage providers may require a larger stake from the mortgage holder. This could be as high as a third of the projected costs of the build. Self-build mortgage providers will often vary the loan-to-value (LTV) rate of the mortgage to balance their risk. This means they may only offer to finance a percentage of the build costs and land purchase, and you will have to find alternative funding for the rest.
Typically, a provider may offer to finance around 80% of the land purchase and building cost, with the remaining 20% coming from other sources. You will need significant personal savings at the beginning, but the long-term returns will make the investment worthwhile.
Build A Team To Build Your Home
Building a new home will involve lots of people, you cannot do it alone. Teamwork makes the dream work, and you are going to have to carefully assemble a group of people who share your passion for the project. The success of this team can make or break your build. If you want to stand a chance of finishing the build on time and on budget spend time researching your contractors.
How involved you are in the day-to-day operations of a house build can help make savings on labour costs but will also add to the timescale of the project if you do not already have the right skill set. It is recommended that you hire a project manager to oversee the operations of the building work, and act as a liaison and point of contact for the site. They will be your second in command. With their help, you will have more time to concentrate on the financial and legal work that will need to be done.
Building sites are dangerous places, and you will have a duty of care to the labourers that work there. A qualified and experienced construction project manager can take responsibility for risk assessing your construction site and ensuring that all health and safety directives are followed. This prevents you from having to micro-manage the work site and lets you concentrate on the bigger picture.
Many people choose to self-build in remote locations, or on a plot of land with limited access. This can complicate a build and may require extra consultation with the local government and suppliers to make sure heavy vehicles have access to your site.
You may need permission to close off a road, or limit access to one, to get equipment and supplies to your construction crew. The logistics of deliveries may take a lot of planning, as well as their own set of risk assessments. This is another good reason to hire a project manager to oversee your build.
Building your own home on a fresh plot of land is an amazing opportunity to create a special place for you and your family while also investing in your future. The potential returns come from the extra hard work and stress that self-builds take, but it is worth it in the end.