Can I Make Money Building Houses By Myself
Self build isn't a path only a few can walk down. Anyone can self-build. Anyone who can get a mortgage on a house can (more than likely) get a self build mortgage. But what sets self builders apart more than anything else is having grit and tenacity and a proactive mindset.
Worried you don't know much about construction? Don't let that put you off. You don't need to know the ins-and-outs to be a successful self builder.
Being able to identify, trust and work with experts in their field is much more important than knowing every last inch of how to construct a wall. Being able to plan ahead, make decisions with confidence and being assertive are key traits for the successful self builder — in a way that knowing all the building jargon is not.
This guide is designed to introduce you to all the elements that you'll potentially come across in your self build journey, ensuring you're fully equipped to have the right conversations with the right people.
What Does Self Build Mean?
What Defines a Self Build?
Self build refers to when an individual commissions a house to be built on a piece of land that they own to live in. Self build usually encompasses a process where the would-be homeowner has control over the build, and can work with an architect, architectural technologist or design and build team to create a home that fits their specific requirements.
Self build is often lumped together with custom build, but the terms aren't interchangeable as, and differ by the amount of involvement the individual has in the build and in the self build project management. While approximately 11,000 self build homes are built each year, less than 10% of those homeowners were physically involved in the process by taking on the building work.
Self builders choose to be much more involved in the creative process than those who choose a custom build, taking part in the design stages, choosing tradespeople and deciding on finishes without the limiting scope of a developer's involvement.
Is Self Build Right for Me?
It would be unfair to say there aren't any restrictions for a self builder – budgets and constraints by the local planning office can often jolt a project off kilter – but in terms of the layout, location and look, self build is all about building a home that's right for you. Not buying something someone else has built that doesn't quite hit the mark: not enough bathrooms, box room bedrooms, no separate office. All things you have to compromise on when buying an already built house.
And that's why people choose to self build. For some, it can be the best way to live in the type of home that's out of reach financially (building your own means you're effectively avoiding having to pay the developer's profits). You might like contemporary builds but aren't keen on developer estates, or you might want to live in a cutting-edge sustainable home.
Whatever the reason, any self build project will demand so much of your time, energy, brain and, of course, money, you will have to be passionate about wanting to build your own home. If it was easy everyone would be doing it. So when you find yourself on a dark dreary day in December, standing on site in a soggy mud pit, freezing cold, you'll want to be able to remember the reason why you're doing it!
What are Self Build Schemes?
In the UK, self build still only represents a fraction of the new houses being built each year, while over in continental Europe, as much as 50% of new houses built are by self builders.
However, the government is hoping to grow this small sliver of self build homes built in the UK by introducing new infrastructure to help those in the UK interested in building their own homes have better access to finances, self build plots and more.
Ideas such as the soon-to-launch Help to Build scheme and existing projects like Self Build Wales are great news for would-be self builders, but they're just the first steps.
A recent review by MP Richard Bacon has advised the government of ways to increase the amount of homes self built in the UK, so the future is bright for the UK's self build sector.
Costs
How Much Does it Cost to Self Build?
How Much Profit Could I Make on a Self Build?
A self build project could make as much as 25% profit in the final value of the home in relation to the build costs.
When asking the question how much does it cost to build a house, you'll need to keep in mind that every self build house is different. However, one way to measure a potential cost is to look at a breakdown per square metre. On average, it will costbetween £1,000 and £3,000/m² to build.
(MORE: Estimate your build costs with our free build cost calculator)
There are some key considerations which will affect which end of the scale your build sits, including:
- Location: Not only do land prices vary across the country, but the cost of labour does also. Building in London, as just one example, will come with a premium in plot and labour.
- Size: Largely, the bigger the house the more expensive, however, in some instances, economies of scale can work in your favour to reduce the cost per square metre.
- Plan, shape and layout: The more complex your layout, the more expensive the build. A simple, square build will be the least expensive.
- Number of storeys: While you'd assume that building more storeys would add significantly to your build cost, it can actually reduce your overall cost per square metre, as additional storeys don't require the same expense on foundations for all the additional space it creates.
- Specification: Basic, standard products are easier to source and fit. Anything bespoke or requiring specialist installation will add to your costs.
- Involvement: The more people you employ on your build, the higher the costs. What parts of the project are you willing, and importantly able, to contribute to?
Is Self Build Cheaper Than Buying?
As previously mentioned, the average profit on a well-managed self build project is 25%, meaning you'll get more house for your money if you build rather than buy.
However, self build mortgages are less widely available, meaning there may not be products offered to suit everyone's financial situation.
This may mean that traditional self build routes require time and financial input that is unfeasible for many first-time buyers.
However, where self build is not viable for some people, the idea of custom build may suit. This route removes some of the obstacles faced by self builders, including finding land, securing planning permission and getting services to site.
This is also a more hands-off approach, but still offers the chance for an individual home that meets individual needs. Custom build sites are usually managed by developers who can give you more information on the financial requirements.
Financing the Build
How Do I Finance a Self Build?
You'll need access to money to buy a building plot, to pay for professional services such as architectural designers' fees and any site surveys required, and to fund the build itself.
The money may come from savings, equity in your existing home, through a self build mortgage or a combination of all three.
Surprisingly few high street banks provide formal facilities for self build finance so you'll likely need to approach a specialist provider.
Self build mortgages tend to follow one of two structures, an arrears-type mortgage and an advance-type mortgage. An arrears mortgage are more common, but will require you to front money for a stage of the build yourself, but will pay you back at the end of that stage. Advance mortgages pay you ahead of each stage, but will generally offer less favourable rates.
How Much Should I Spend?
The basic formula you need to stick to is: Build cost + plot cost + contingency < the value of your finished house.
Remember, you'll also need to account for the cost of your plot, which will consume a sizeable chunk of your budget and set aside between 10% and 30% of your budget as a contingency.
For those that have the option, building on a garden plot or any other kind of existing plot that you (or family) already own can be an attractive option for this reason.
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Finding a Self Build Plot
How to Find a Self Build Plot
Specialist plotfinding services (like plotfinder.net) are incredibly useful when it comes to finding a plot, but you should also be proactive in trying to find land. Explore the local area, visits auctions, and use word of mouth to let friends and family know you're looking for a plot, as you never know what this will turn up.
Also, make sure you register with your local authority under the Right to Build, which requires local authorities in England to keep track of the demand for serviced plots in their area.
However, plots will rarely fall into your lap, so you'll often need to be savvy to secure one.
When assessing your plot, look out for:
- planning permission that has expired, or is about to expire
- any access issues
- any covenants
- services — are they already in place?
- title deeds — make sure these deeds are 'absolute' rather than 'possessory' or negotiate on the plot price accordingly
Self Build Routes
Which Self Build Route to Choose?
Only around 40% of self builders actually manage their own projects, with the rest using builders or package companies
Who is going to manage your self build is one of the most critical decisions — not only for the success of your build, but it will also have a huge bearing on the costs involved.
While the majority of projects are made up of a main contractor and subcontractors, self-managed overall by the would-be homeowners, this isn't the only option for your build, and depending on your budget, and even your own skills, it may not be the best fit for you.
A professionally managed build may call on a project manager to oversee the site and schedule. The benefits of this are not only the experience of someone who manages builds for a living who may be able to predict any potential pitfalls, taking the responsibility off busy homeowners, but also providing a little distance between the self builders and the house during the construction process — helping to manage conflict on the site (and with neighbours).
Other options include package builds and custom build, which use experienced companies to manage the build, find tradesmen and look after the site from start to finish.
Finally, if you have comprehensive building skills, you may choose to take on the build as a DIY project. Bear in mind your home is still subject to Building Regulations and certain elements will be required to be installed or signed off by a competent person.
Choosing a Construction System
What Self Build Construction Systems are Available?
While your choice of superstructure material will have little impact on how your finished self build looks, it is well worth considering the available construction systems:
- Masonry
- Timber frame
- Structural Insulated Panels (SIPs)
- Insulated Concrete Formwork (ICF)
- Oak frame
- Cross Laminated Timber (CLT)
- Natural building materials, using such materials as straw bales, hempcrete and cob
Some self builders are less concerned with how the house looks 'under the bonnet', and are happy to leave the decision with their architect or structural engineer.
It's worth considering that while some construction methods may outwardly appear more expensive than others, they may reduce costs in other areas, such as time spent on site, or the overall build time, which all need to be considered in the final budget for your construction system.
How to Design a Self Build
Do I Need an Architect for a Self Build
While some self-builders do design their own homes, you'll more than likely need a designer on board to help you formulate plans for your dream home. This might be an architect, architectural technologist, an architectural designer or an in-house designer at a package company.
It can be tough to find an architect or designer you have the right rapport with, so expect to spend at least a couple of months searching for one. It's better to hold off starting your build than to start it with the wrong architect or designer.
Do I Need Planning Permission to Self Build?
When you self build, you'll have to apply to your local authority for planning permission. The cost of submitting a planning application varies across the UK, but is currently £462 in England.
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However, the real cost of obtaining planning permission arguable comes from preparing the plans and documents (the design fees) in readiness for submission and any accompanying surveys (such as ecological surveys) that may be required.
You should find out when your local planning authority has approved your application after eight weeks — although more complex schemes can take longer.
All planning permission is granted with planning conditions attached. Failure to address the conditions will invalidate your consent, making any work done unlawful.
Self Build and the Building Regulations
All new homes need to adhere to the Building Regulations, and as such, a building inspector will visit at key stages of the build to inspect the work and ensure it complies.
The build will usually need to be inspected at the following stages during a self build:
- excavation for the foundations
- pouring concrete for building foundations
- building the oversite
- building the damp-proof course
- drainage
- a visit prior to completion
- a final visit on completion
Finding the Right Self Build Team
How to Build a Team for Your Self Build
You can establish contact with and line up a builder, main contractor, package company and/or subcontractors during the design and planning processes, but you won't get an accurate quote for the work until your Building Regulations drawings have been finalised.
One of the best ways to find a builder and/or subcontractors is through word of mouth — ask your designer, friends, family or neighbours who've undertaken projects, and anyone else you know locally who's built their own home, for recommendations.
Much like finding a designer, choosing a builder requires plenty of research. It's best to meet with them to discuss your project and to ask them to quote (your designer can help you to prepare tender documents). It's also a good idea to visit a project they've completed and to talk to previous clients.
The best builders and subcontractors will be booked up months in advance, so it pays to start your search as early as possible.
Insurance
What Self Build Insurance is Required?
As soon as contracts are exchanged on your plot, you will need to have self build insurance — usually a specialist policy for self builders. A comprehensive self build policy is advised and will cover any public liability, building works, employers' liability and personal accident.
Get a quote now to protect your self build.
Sevices
Getting Services to Your Self Build Site
Getting services to your site (if necessary) can cost between £500 and £10,000+, depending on your situation and whether the connection needs to be made across private land (where you'll need to secure a wayleave to grant access to dig) or public highways (which may involve road digs).
Though gas and bringing electricity to site is not essential during the build, a water supply is needed early on.
Where to Live During a Self Build
Very few self builders are in the position to remain in their existing homes while building a new one, so you will need to consider where you are going to live while you build your dream home.
- Staying with family/friends: the average self build project takes around a year on site, so if you are planning on staying with friends or family, make sure that you are realistic about the timescale of the project
- Renting temporary accommodation: this is an option, but an expensive one (even more so if your project hits any unforeseen delays)
- Living on site: erecting a temporary home on site, or staying in a caravan or mobile home, offers an opportunity to keep an eye on the site during the build, but may take its toll over a longer build time.
Project Duration
How Long Does it Take to Self Build a House?
Once you're finally ready to start on site, you'll need to know what happens and when, regardless of how physically involved you are in the process. This typical self build schedule will give you an idea of what to prepare for and when.
The time your build takes will depend on the construction method you choose. Some modern methods of construction, particularly those that are made offsite, require less time than traditional block construction. On average for a typical two-storey, three-bedroom house, you're looking at around 40 weeks, while some methods, such as structural insulated panels, can reduce this timescale by as much as eight weeks.
What is a Snagging List?
Despite lacking a concrete definition and not being part of the JCT suite of building contracts, it's generally accepted that snagging concerns identifying parts of the work that have been completed, but may require remedial action prior to official sign-off.
Do I Qualify for CIL Exemption?
The Community Infrastructure Levy (CIL) imposes a fee on the creation of new homes, which is determined by the local authority and is based on the size of the house.
The good news is, subject to criteria, self builders are now exempt from paying CIL. However, the four-stage exemption process must be followed to the letter.
How Long do you Have to Live in a Self Build?
While there's no limit on the amount of time you have to live in a house before selling for the likes of reclaiming VAT on your build, if you've obtained the Community Infrastructure Levy exemption, you'll need to live in the property for a minimum of three years. If you sell up and move on, you'll be required to pay CIL in full.
How to Reclaim VAT on Your Self Build
One of the major benefits of self build is that you can reclaim VAT on most of the building materials. VAT-registered builders and subbies should also zero-rate their invoices (while, of course, if they're not VAT-registered, they shouldn't be adding it to bills in the first instance).
In general, you can reclaim for all materials that are fixed into the house, although interpretation of this can be quite complex.
You can only make one claim (using the VAT 431NB form) and that must be made within three months of the project completion.
Obtain and keep hold of all VAT receipts to submit with your claim. Don't underestimate the time you'll save by keeping your VAT receipts safely in one place as you go along.
Sarah is Web Editor of homebuilding.co.uk. She began her career more than a decade ago, working on the editorial team ofPublic Sector Building magazine, before joining the wider Homebuilding & Renovating team as Social Media Editor in 2012. Since purchasing her first house in 2015, Sarah has been adding to the ever-increasing list of home improvements she needs to make; including extending over the garage, resurfacing the driveway, replacing existing flooring and revamping the kitchen. Fortunately, in her eight years on Team Homebuilding, including three as web editor, she is not short on design inspiration or top tips to tackle or project manage these tasks herself.
Can I Make Money Building Houses By Myself
Source: https://www.homebuilding.co.uk/advice/self-build#:~:text=A%20self%20build%20project%20could,self%20build%20house%20is%20different.
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