Recently, the UK government announced plans to introduce a so-called “Help to Buy” housing scheme, which would make self-building more accessible throughout the UK and provide an initial £150 million in dedicated funding and investment.
Similar to the previous ‘Help to Buy’ scheme, this will enable buyers to acquire low-deposit mortgages through equity loans, pertaining to both self and custom-build homes.
To understand precisely how helpful this is, however, we’ll need to understand the average cost of a self-build home and the key component to this type of project.
Appraising the Viability and Cost of Self-Build Homes – Starting with Land
Many will argue that there’s plenty of space in which to build in the UK, with a paltry 8.8% of all land currently built-on in England alone.
However, we should note that of the remaining land, 72.9% of this belongs to farms, while 14.5% is categorised as natural land the remaining 3.8% considered to be green urban areas (comprising parks, gardens and golf courses).
So, identifying a viable plot of land can be relatively challenging, and you’ll need to use resources such as plotfinder.net (which is the UK’s largest database of small development sites) to seek out available land and their estimated prices.
In terms of cost, a comprehensive report commissioned by Homebuilding & Renovating suggested that the median plot price on these shores came in at £190,000.
This study canvassed the findings of 500 self-builders who had recently completed a project, so this price is relatively accurate and reasonable.
What About the Median Build Spend?
This is where things can get a little more complicated, especially when you consider the sheer scope of self-build projects and the size of your new property.
In simple terms, the median build spend came in at £270,000, with this including the combined cost of labour and materials along with any other associated expenses.
However, there was a significant variation in the total build cost range, from £300/m2 to more than £5,000/m2 in some instances.
This suggests that the size and desired finish of your self-build home will have a huge bearing on how much you’ll pay, so it’s crucial that you have a clearly-defined vision and budget before you launch your project.
The Last Word – Returns and Getting Started
If you’re ready to get started, the first step will be to sign up to the Right to Build register in your local area, as this affords you easy access to their local Custom and Self-Build Demand Register.
From when you sign the register, councils have three years to ensure that there are sufficient ‘shovel-ready’ self-build plots, measured from the end of October each year.
When it comes to returns, we see that the median market value of self and custom-build homes in the UK is around £500,000.
So, even when the project costs £460,000 to complete, you can bank an immediate profit even before factoring in subsequent property price hikes.