Self Build Land
Funding a Self Build Project
A sound financial plan with a good degree of contingency built in is recommended.
Financially, self build projects on plots of land for sale have 3 important elements to them:
- Funding
- How much will your project cost, and how will it be financed?
- Value Added Tax
- No VAT is currently payable on new housing in this country, if you do pay VAT on construction materials, you will be able to reclaim this later
- Stamp Duty
- Stamp duty is not payable. The only time it is a consideration is if your plot costs more that £60,000. If so, Stamp Duty will be levied at 1% on the amount over this
Firstly, identify a sensible contingency sum. An 8-10% contingency sum is acknowledged as a reasonable amount for most self build projects. The importance of this point cannot be over-estimated. This is because if you encounter significant overspend in one part of the project, you must be able to cover the cost without putting the entire project in jeopardy. This contingency sum can either be provided by your own resources, or else be incorporated in your loan.
Secondly, identify the price of your plot. If you are lucky, you may already own your plot. Or it is possible that you may already have a specific plot of land for sale in mind and know its price. If not, try looking in local newspapers, asking estate agents or using one of the many land agents to find plots of land for sale.
Thirdly, allow for services. Unless you are buying serviced building plots of land for sale, connections to services such as to water drainage, electricity, gas and telephone can be surprisingly expensive. Depending upon the area the self build land is located in, these can come to £5,000 or more.
Fourthly, consider what professional fees are involved. You will have to pay for planning and building regulations in any situation, but you will also have to pay for other professional services as required by your lender for your plot of land for sale. These will include some form of professional certification for your plot of land for sale. For example, a site survey may be required and soil samples be taken by a surveyor or a structural engineer. The involvement of these kinds of professionals on sites with complex issues (such as difficult soil composition and conditions or poor drainage) is largely inevitable, since they will be needed to design the foundations. In addition, if you want your build project-managed by an architect or other building professional, this will add to the overall cost. On top of all this, you will have your own legal fees.
When you have done all of the calculations above and summed the total, you will be able to see how much of an impact this will have on your building plots for sale's budget and self build mortgage. There will, of course, be other considerations for your to take into account later, but in principal at this stage, you now know whether you can afford to go ahead, and what realistically you can hope to build.
A simple way to calculate plots of land for sale value is to find similar sized plots of land for sale in the area you are looking, that already has a property built.
Find out from a local estate agent as to the market value of the property. The value of plots of land for sale should equate to approximately 45% of the market value. For example a four bed detached house on a site of 0.15 acre in the area your looking is priced at £150,000, the plot value would approximate to £67,500.
The percentage value of plots of land for sale will vary from area to area greatly increasing in counties such as Surrey and Hertfordshire. Buying self build land involves far more than simply paying for it and moving on to the site! The business of buying and selling UK land for sale has its own vocabulary, and its own set of procedures. Solicitors, Land Agents and Estate Agents make their living by operating this system, and they do not go out of their way to explain what they are doing for their clients. If you are buying a self build plot of land, it is important to realise that you are going to have to accept the system, and learn the vocabulary.
