Tens of thousands of people intend to make 2016 the year they get their hands dirty and build their dream home.
Self-build has always captured our imaginations – hence the success of television programmes such as Grand Designs and Building The Dream.
Experts say the next 12 months may see a record number of people turn that dream into reality. The good news is that almost every aspect of the process is likely to be easier – and more cost-effective – than ever before.
Here are the key areas that can make for a successful self-build.
Taking the plunge: Dennis and Pam Whiteway at their self-build in Cheshire
FIND A PLOT
Buying land for a self-build has always been a challenge, but coming changes should ease this process.
In last year’s Autumn Statement, Chancellor of the Exchequer George Osborne unveiled plans to release enough public-sector land to build around 160,000 new homes.
Local councils are being encouraged to ensure some of this land goes to self-builders. New rules mean they have to respond positively to demand for plots from local residents – and an official register has been set up to show how much demand there is.
Find a plot: Buying land for a self-build has always been a challenge, but coming changes should ease this process
IT’S BEEN A STEEP LEARNING CURVE BUT THERE’S LOTS OF HELP
First-time builders Dennis and Pam Whiteway are on track to move into a unique, custom-built home within a year of buying a plot in rural Cheshire.
Reading a local newspaper article about a nearby self-build site in the summer of 2014 spurred them into action. Pam says: ‘We have been interested in self-build for 30 years.’
They went to a presentation held by self-build company Potton and reserved one of the first of 15 sites at French Field near the village of Burtonwood.
The couple tailored a Potton design for a three-storey, four-bedroom home.
With the roof being finished this month they are aiming to be in by Easter. Dennis, a retired IT project manager, says: ‘It has been a steep learning curve, but we have had invaluable help from the site’s full-time project director.’
The couple sold their former home to help fund the project and have bought site insurance and a ten-year structural warranty from BuildStore. Dennis adds: ‘There is a lot of help out there if you take the plunge with self or custom-build.’
At French Field the cost of plots and builds are between £250,000 and £350,000. The Whiteways say it will be good to know the property should be worth more on completion than it cost to build.
Latest figures suggest most people can factor in an instant ‘profit’ of between 10 and 15 per cent.
Put pressure on your local authority by registering your interest online at custombuildregister.com or custombuildhomes.co.uk.
It also pays to contact local estate agents to see if any individual parcels of land have come up for sale.
The established plot search facility at buildstore.co.uk is also worth using.
New self-builders are not alone. More than 1,000 people completed their own homes every month last year – and a host of organisations helped them with tips and advice.
Annual shows from organisations such as National Self Build and Renovation Group and the National Custom and Self Build Association provide workshops.
Get advice: New self-builders are not alone. More than 1,000 people completed their own homes every month last year – and a host of organisations helped them with tips and advice
The popularity of ‘custom building’ is also set to make the process easier. With this, you do not buy an isolated plot and arrange all the work.
Instead, you buy a plot on a larger development that has pre-approved planning consent and a site manager who takes charge of communal issues such as utilities and connecting roads.
You then build the home you want on your individual plot.
OBTAIN A MORTGAGE
Conventional mortgages do not work for self-builds because on day one there is nothing for the lender to have as collateral.
Instead, self-builders who need to borrow must find lenders who release regular chunks of capital as the build progresses.
Normally, a slice is released to help buy the land then, when the foundations are finished, to put up the walls and the roof.
After the financial crisis of 2008, most self-build lenders withdrew from the market.
But today there are a dozen lenders besides established providers Ecology Building Society and BuildStore. Building societies dominate the list – including Cumberland, Newbury, Saffron and Scottish.
Interest-only loans are available, though self-build interest rates tend to be higher than on traditional loans.
Two-year fixed-rate loans can be found from about 5 per cent, though similar-priced variable rate deals can be better as they carry smaller redemption penalties. That is important because most self-builders redeem their specialist loan and remortgage on to a cheaper mainstream mortgage when they are ready to move in.
As soon as a home is completed it should be treated as any other property, so you can shop around for the most competitive mortgage.
As the home’s final value should be higher than the loan to be remortgaged, owners stand a good chance of qualifying for a best-buy mortgage rate.
GET BACK YOUR TAX
Tax breaks can help a self-build project work. As you start off by buying only a plot of land, the big stamp duty bill that would be paid for buying a completed house can be avoided.
When the build is finished, almost all the VAT paid along the way can be reclaimed. It can also be reclaimed on services such as plumbing and roofing, and on most building kit and supplies.
Get your tax back: Tax breaks can help a self-build project work. As you start off by buying only a plot of land, the big stamp duty bill that would be paid for buying a completed house can be avoided
Only one claim can be made – for the total amount – within three months of finishing the job, so good record keeping is essential.
One final point. From this April, second homes attract higher stamp duty charges. These can be avoided if the second home is a self-build.
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