The Pros and Cons of Self-Build Homes

by | Dec 3, 2021 | Design

There’s no doubt that the notion of so-called “self-build” homes is becoming increasingly popular in the UK, with steady growth in the number of such properties being constructed noticeable ever since ever since the introduction of the 2016 self-build registers.

In 2019, for example, 15,902 single dwellings were completed nationwide, representing the third consecutive year of growth and an annual increase of around 1,000 homes in total.

Despite this growth, however, there are both pros and cons to keep in mind when considering a self-build project. These include:

The Pros:

  • The Government is Backing Self-Build Homes: Recently, the government has formally announced its plans to introduce a ‘Help to Build’ scheme, which aims to make self-building more accessible to citizens nationwide. This will include an initial £150 million in dedicated funding, while hopefully attracting first-time buyers who want to construct their dream home.
  • You Have Creative Freedom: As the term ‘self-build’ suggests, aspiring owners will have creative freedom when choosing both the location and aesthetic of their home. Sure, there may be some restrictions in terms of available plots and your financial budget (we’ll touch a little more on this later in the piece), but fundamentally self-building allows you far more freedom and flexibility in the marketplace.
  • The Value of the Home Should Supersede the Cost of the Build: While not all self-build projects have been created equal, the combined cost of land and labour will set you back around £450,000 on average. Conversely, the average sale price of a self-build home is approximately £500,000, suggesting that you can achieve a minimum return of 10% if you choose to sell the property within a short space of time (and this is without factoring in subsequent price growth over time.).

The Cons:

  • Self-Builds are Expensive: While it’s possible to achieve a viable profit on your self-build home, the figures clearly show that this type of project requires a significant financial outlay. The cost of securing a plot of land alone can cost as much as £190,000, while labour and material prices can amount to more than 260,000. Much depends on the scale and nature of your project, of course, but it’s important to budget in detail and understand the scope or the financial commitment before getting started.
  • Self-Builds are Hard Projects to Manage: Buying an existing property can be challenging enough, especially considering the impact of house chains and the complexity of stamp duty. However, building a home from scratch can represent an even bigger minefield, which such projects can be incredibly time-consuming and are prone to continual delays. You can negate this by liaising closely with high quality builders and architects, of course, but it’s still an important consideration for aspiring owners.
  • The Deposit Size is Much Higher: Last, but not least, we come to the self-build mortgage, which may command a significantly higher deposit size of between 25% and 50% of the total spend among some lenders. This may be a hard requirement for buyers to fulfill, while lenders may also require you to have the relevant planning permission in place before they can accept your mortgage application.

Read through our useful guide for more information

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