In
the midst of the struggling housing market, there’s
an army of self builders who are busy building their
way up the property ladder. Some housing pundits
say that there has never been a better time to build
your own home, and self build specialist BuildStore,
is reporting a surge in self build land and finance
enquiries.
Many
people dream of building their own home, and an
estimated 15,000-20,000 Britons make that dream
a reality every year. A self build project can involve
a substantial degree of planning, time and hard
work, but the rewards can be enormous, both financially
and emotionally.
One of the major benefits of self build is that
everything is done at cost price, so there is no
built-in profit to pay for. Therefore, when construction
is finally complete, the value of the property typically
exceeds the total build cost by around 25%-35%,
securing an impressive instant equity in the new
home.
Until the crash, the property market was climbing
at a phenomenal rate, with an increasing volume
of mortgage lending, housebuilding and housing transactions.
These ‘good’ times have meant ‘bad’
times for self builders; there is generally a shortage
of available plots of land for self builders, and
the high land values price some self builders out
of the market. During a time of increased development
and housebuilding, self builders are often outbid
by developers.
However,
with the slowdown in the property market and the
collapse of the private housebuilding industry,
land is available in quantities and at a price that
has not been seen in years. With the help of plot-finding
agencies, such as PlotSearch, self builders now
have access to around 8,000 building opportunities,
but they have to move fast – good plots are
being snapped up quickly. PlotSearch has reported
that its enquiries for plots are high, and have
increased even more in 2014, as more people recognise
self build as a way to climb the property ladder.
The PlotSearch database has grown significantly
in the last couple of years, from around 5,000 development
opportunities to over 8,000, and with that, prices
have also dropped, making it an ideal time for self
builders to grab a bargain. Plots which in early
2008 were priced around £160,000 can now be
snapped up for less than £125,000 –
a 25% drop, and below the threshold for stamp duty
tax.
BuildStore,
the UK’s self build expert and service
provider, is keen to help housebuilders,
landowner and local authorities realise
the potential of the self build market,
and work with them to help sell their land
assets as serviced plots direct to self
builders.
Raymond
Connor, Chief Executive of BuildStore, explains:
“We have seen a steady increase in
the number of people building their own
homes in recent years, and even throughout
the recession, our levels of enquiries for
self build land and finance remain buoyant.
Budding self builders who have been waiting
in the wings for months are now making the
most of the increased supply of cheaper
land and availability of self build finance.
So, for anyone who has considered the idea
of self build, now is the time to act –
good plots at low prices won’t be
around for long.”
|
|
Another important consideration for building your
own home is how you will fund it. Building a home
is not the same as buying a house, and mortgages
for individual homebuilders are not like ‘normal’
house purchase mortgages. There are lenders in the
market who offer specialist mortgages for self builders,
so consult a specialist advisor to help you get
the right funding solution to fit your circumstances.
With any self build project, cash-flow is king and
time is money. If you are unable to buy the materials
you need, when you need them, or pay your builders
on time, and if you can’t pay your contractors,
they will quickly move on to another job. Having
the cash to pay your bills and buy materials will
avoid these delays. If you don’t have a large
amount of cash sitting in your bank before you start,
then an advance stage payment mortgage will give
you the positive cash-flow you need.
BuildStore’s exclusive Accelerator advance
payment mortgage provides up to 95% of land costs
in advance, and up to 95% of build costs, released
in stages, at the start of each build stage. This
also means that you won’t need to sell your
existing house to release equity to fund your project
– so you can live in your home throughout
the project, saving you money on temporary accommodation.
On average, self build borrowers end up with a 60%
loan-to-value ratio at the end of their build, which
gives them an impressive chunk of equity.
