Formerly the preserve of the wealthy, self-build is now a viable option for those wanting a low-cost home and willing to put in some hard work.
Norwich & Peterborough Building Society estimates that 20,000 people self-build each year and that three out of five people would consider designing and building their dream home. The self-build market is estimated to provide about 13 per cent of all the new houses built in the UK, and Skipton Building Society says the average self-build mortgage is worth about £170,000.
According to self-build advice company Buildstore, the numbers of people doing it themselves are remaining steady but TV programmes such as Channel 4Â’s Grand Designs, coupled with high house prices, are fuelling interest.
But many people are still put off by perceived affordability problems, the time it can take and a lack of experience.
Why DIY?
Self-building can offer many benefits over a traditional house purchase, such as typically being worth 30 per cent more on completion than it cost to build. Another important factor is individuality; self-builders can make their properties unique and can customise their homes to match their own specific needs.
Environmentally conscious builders can, furthermore, incorporate energy-efficient features, including energy-saving heating and water systems, efficient insulation and water-recycling systems.
The most important function of the self-builder is to oversee and manage the project from start to finish, rather than actually doing the building themselves. These days there is a lot of help available from companies such as Buildstore which offers advice on everything from finding land and buying materials to finding a mortgage and appointing a project manager.
Buildstore spokesman John Hay says: “Self-builders usually get a project manager or architect and get them to manage the build. Their fees are usually based on a percentage of the costs. Project managers offer varying levels of involvement from just negotiating contracts and getting quotes, to overseeing each stage through to completion. Essentially the more you spend on a project manager, the quicker the job will get done.”
For those wishing to manage the project themselves, be warned that it is not as easy as it looks. Linda Will is managing director of Accord Mortgages, which offers loans in conjunction with Buildstore. She says: “The biggest mistake is people not treating it as the project it really deserves to be, and it’s a more difficult project if they don’t have any of the skills themselves. You might need 20 different tradesmen in the right order at the right time, and it’s when timescales slip that’s costs go up.”Financing the build
In the past the only types of mortgage on offer were arrears staged-payment self-build mortgages, which meant a stage had to be finished before funds were released and customers needed to be cash-rich at the beginning to get the build under way.
But, together with lenders such as Accord Mortgages, Skipton Building Society and Norwich & Peterborough, Buildstore now offers advance staged-payment self-build mortgages called Accelerator mortgages.
Funds are released prior to the start of each stage and customers can borrow up to 95 per cent of the land costs and up to 95 per cent of the construction costs.
Hay says: “Stages are logical break-points in the project, such as the foundations being finished, or the property being treated to protect against wind and water. The last stage is to complete the house and fit the bathrooms and kitchens.”
Skipton customers can choose any product from its mortgage range and take it on an Accelerator basis. It also offers a three-year finance deal, called the Advance product, for borrowers who want to stay in their existing home while they build, but who will not require a mortgage once they have sold it off.
Meanwhile Accord Mortgages offers the only offset Accelerator mortgage, which benefits people who have sold a property to fund the build and have cash reserves that can be offset against what they owe.
Gone are the days when people building their own home lived on-site in a caravan. Hay says: “Self-build mortgages are designed to allow you to remain in your current house and keep the mortgage running while you’re building. But the existing mortgage is treated as an expense and reduces the maximum you can borrow. Another option is to sell up and rent accommodation while building.”
A good plan with full costings is essential to any self-build project, as are organisational skills and knowledge of local suppliers. A contingency fund is vital, as most projects cost more than anticipated.
