If you fear that you’ll never be able to afford a decent house, then consider building one yourself. What’s that you say? Plot prices are ridiculous and architects and builders will skin you alive? True enough but there is a way…
Find a like-minded house buddy or two and pool your cash to buy a plot suitable for building two or three houses. Multiple plots are much cheaper than single plots. I recently bought a plot with permission for two 4-bed detached houses. If I split the plot with a chalk line, I could sell the individual plots and make a 30% profit margin. This should give you some idea of the typical discount that can be achieved by buying a multiple plot.
Once you’ve snagged your cheap plot, the next step is to build your house for roughly half the traditional amount per square meter. Remarkably, this is far easier than you might think. All you need is a good timber frame company, an aversion to the traditional construction industry and a biro. Under no circumstances should you use an architect or main contractor. Dispensing with the architect and main contractor will take a massive chunk out of your build costs, save you time and will probably improve your build quality. However, even more savings can be made by utilising some simple self-managed building methods.
By the way, when I say build a half-price house, I don’t mean half the quality. I am talking about a house that is better insulated, quieter and more solid feeling that anything churned out by the national builders. New houses are far better insulated than old houses but most people still prefer older houses because they feel and sound more substantial. It doesn’t need to be this way, because there are new materials and construction methods that can make a new house just as ‘solid’ feeling as an old house while still being quieter and better insulated. Lazy architects and careless builders are responsible for ruining the reputation of new built houses. In other countries people often prefer new houses because they are better in the same way that a new car is better than an old car. The classic car market has taken a bit of a beating recently because car manufactures are churning out designs that look every bit as good as the beautiful old classics. The allure of great design (retro or modern) with modern functionality is very strong and new houses should be no different.
Just in case I have given the impression that the latest building materials were expensive or complicated, let me give some examples. There are new types of super dense plasterboards (Fermacell etc) that are so solid and dense that they feel and sound just like solid walls. They deaden sound, hold back fire and will even take a standard rawlplug. Heavy cabinets can be mounted on these walls, just like they can be on brick walls. This solid and silent feel is further enhanced by the latest generation of sound deadening ‘wools’. An interior timber stud wall built with Fermacell and specialist sound deadening ‘wool’ transmits less sound than a 100mm concrete or brick interior wall and feels just like the real thing. Floors/ceilings use exactly the same materials but they have the option of additionally using engineered ‘silent floor’ joists and sound isolating resilient bars. The sound transmission levels of these modern floors exceed the dB transmission levels of older houses by several hundred percent.
Tomorrow: If you want a cheap home, build your own house (Pt 2) – Why you don’t need an architect
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Tags: house price news, House Prices, News, planning permission, self build
The high price of building land is a big No-No for many. But building my own home has always been a dream of mine. I think that the time to do so MAY be with us soon. But it is not here yet.
These figures are a guide not a gospel: I think the average- Nationwide BS- selling price peaked at £185k. Given that a small-ish detached 3 bed house costs about £60k then land/ architects etc cost £125k. If the average selling price were to fall to £120k (long term relationship to average income) then logically land costs would fall to £65k (£125k less builing costs of £60k)
ie if average house prices fell from 185 to 125 that is roughly a drop of 1/3 whereas by the same criteria the cost of land would fall by about 50% (125 to 65). And on past experience building land should over-correct. From looking at land prices these haven’t fallen significantly yet. Why? Surprising given the number of builders going bust and needing to liquidate their landbanks. Surprising given how many private individuals are sitting on potential building land as investment/amenity land, people who maybe should liquidate their investments?.
I can forsee a rapid correction in land prices (falls of 50%+) (if) & when the present financial stimulus packages are abandoned (resulting in much higher borrowing rates) as simply delaying an inevitable correction. May/June next year?
But an interesting & thought provoking piece
It’s getting so that it’s the only way – if one can afford the land.
[...] If you want a cheap home, build your own house (Pt 1) « The … [...]
[...] If you want a cheap home, build your own house (Pt 1) « The … [...]
Leo: You’re land/build cost ratio is a bit out of whack. A developer always looks to buy a plot for about 40% of the eventual value of the developed plot (sale price of finished house). No developer worth his salt would pay more than 50% of eventual developed value. Also I would never use an architect, which is one of the points made in the article. This will be explained tomorrow (the article was too large so it has been split up).
If it is your dream to build a house then you should peruse the article tomorrow. I have actually used all the methods that will be explained in part 2.
If you are wondering why plot prices have not fallen it is because there is hot competition for them. There are lots of people willing and able to buy plots. I’ve just bought two and will be repeating the build formula used on my last house. If you cant afford a plot, then like I say, team up and buy a multiple plot. It’s much cheaper.
The main point of my article is that there is no reason to wait for the ball to come on to the bat (i.e. land prices coming down because they might not). It is possible to buy a plot and build a house that is worth almost double what you paid in total. If I can do it, then so can you
Joseph
I keep looking.
But I don’t think my estimate of plot value was that far out. Simply because there is a diffrence between a developer & a private builder. What I mean is that the ‘cost’ of a house is relatively consistent- £60k in my example (-although obviously now is a good time to ’screw down’ prices/labour.) The only true variable in the cost of a new build is land (land with p/p). In the area where I am looking (Cornwall) I just haven’t seen a significant increase in the number of plots for sale nor a significant fall in asking prices. Other than for the reason I gave (artificially low IR) I would have expected there to be a rush of land on the market because of builders having to cash in their landbanks, speculative land holders under say business pressure to liquidate, people who hold land as an amenity in the good times, people who have a suitable plot attached to their property & wish to sub-divide.
But I look forward to your pt2 of your article tomorrow.
Can’t wait ’til tomorrow Joseph.
As you say the competition for plots is fierce in certian areas (mine in particular).
Still I live in hope of finding one.
Perhaps a link or 2 to self build mortgages would be useful in tomorrows article.
Leo: The colour of your money is the same, no matter if you are a private builder or a developer. If you think it makes a difference then tell them you are a developer. I’d tell them I was a stripper if they sold me the plot. Always promise to let the plot-selling agent sell the finished product, even if you don’t intend to sell it. It helps. Also tell them you are a cash buyer, even if you are not. It also helps. You have to call all the agents in the area and talk the talk. The good plots are only offered to people who make the effort to strike up a relationship. Mind you, I actually found my current plots while out cycling. They were for sale privately.
As you will see in tomorrows article, the cost of building can, in fact, be extremely variable. Do not use an architect or a main contractor and use intelligent building methods. I build for about half the square meter ‘norm’. Have faith..it’s possible
The great thing about writing this article is that for once, I know I’m right. Normally an opinion is subjective but I’ve actually done this, which gives me that rare glow of certainty. It was once only a theory and a some notes I’d put together over several years. I took a deep breath and tried it which caused me some stress. However it worked very well and I’m now doing it again. I was very nervous but sometimes you’ve got to take a deep breath.
We will put out part 2 in the morning with some links for more information as requested.