Why Selfbuild

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All of us have dreams about our ideal home. Is it a large Manor house situated at the end of a winding driveway or is it a country cottage with a beautiful garden. Finding that home, however, or at least finding it at a price that you can afford, is another matter. These houses that would possibly suit your idea of the perfect house are very few and far between.

There is however, another alternative. A growing number of people are recognising that perhaps the best way to find the home they want, designed and decorated to their own individual taste and needs, in the location of their choice and perhaps most importantly, at a price they can afford, is to build it themselves.

Selfbuild houses in Europe the USA and Canada are the norm. A large proportion of newly built houses are designed and built to the owners specification.

However, with the growing demand for consumer choice and a heightened awareness of value for money, the idea of tailoring housing to our individual needs seems at long last, to be taking its rightful place in the UK housing market.

This is reflected both in the houses being built by some better developers who now offer househunters more quality and choice, and in the growing number of households considering building as an alternative to buying their next home.

According to a recent market survey, "the number of households building their own home has grown from a few thousand at the beginning of the 1980s, to over 20,000 a year in 1994, which, according to figures from the National House Building Council (NHBC), represented one in every three new detached homes.

 But this is not the only reason why building, as opposed to buying, is growing in popularity - it also makes incredibly sound financial sense. Building to a standard specification (the sort of standard you would expect from a quality developer) can work out to be 20-30% cheaper than the property's open-market value on completion, i.e. 20-30% cheaper than buying.

Building a house effectively allows the housebuyer to purchase their home at cost price, ie the net cost of the land, labour and materials. The difference between the total build cost and the value of the completed property, known as the 'residual value', and which reflects the effort and organisation involved in developing a site appropriately, is translated into equity in the property. It is from this 'residual value' that speculative house builders make their profit and cover their sales and marketing costs. For individual homebuilders, it is a cost saving that leaves them with a considerable stake in the ownership of their home, which is theirs should they choose to sell.

Part of the growing success of self-build, as it is often referred to, may lay in the tax concessions from the Chancellor. Building a new home is zero-rated for Value Added Tax (VAT). Other tax advantages include exemption from capital gains tax when the property is sold and the capital realised; double MIRAS income tax relief, for those who buy a plot for their project, but have not yet sold their existing home; plus, in the majority of cases, exemption from stamp duty, as only the plot purchase is subject to the 1% tax, and then only if the purchase price is above the £60,000 threshold.

 Given the positive cost advantages of building as opposed to buying, many families see it as a way of moving up the housing ladder into a home they could otherwise never afford. Others build because they already own a plot, either because they are farmers, or because they have a large garden, and so they are enhancing the value of an asset they already own. But whilst cost is a major incentive for some individual homebuilders, for others it is the potential to design a home that reflects their needs that inspires them to build.

Are You A Selfbuilder ?

Selfbuilders are a different breed of person. You will need to be able to take pressure, cope with hassle from the tradesmen and suppliers, be able to estimate and order materials, like living in a caravan or small rented house. These may seem like negative points but for a selfbuilder they are all part of the build process. The positive points totally outweigh any negatives. Satisfaction, fulfilment, buzz and a very well specified house at a fraction of the cost.

Despite the benefits of building as opposed to buying it is not an option that will suit everyone. For a start, there are clearly fewer opportunities to build in major urban areas and so those who want or need to live in heavily built up areas are unlikely to find a site they can afford. The majority of people build on the outskirts of towns, villages and small settlements where land is available. Interestingly though, there is a gradual migration from cities back to the countryside, and this is where surveys have found most people would rather live.

Some people simply do not want the bother of having to get involved in a building project and will not even consider building. There are also some who will always prefer older properties, perhaps because of their association with the past, or their style and detailing, or perhaps because of their mature gardens. Others have a prejudice against 'new' houses altogether, perhaps as a legacy of so many years of bland estates, and are unable to see that in terms of cost, comfort and running costs, there really is no comparison between a new and an old property.

Buying a new house from a developer will overcome the costs inherent in running an older property, but buyers are still left paying off a mortgage on the developer's profit for years to come. Often the same property could be built for far less than the developer's price, and consequently require a considerably smaller mortgage. Over twenty five years, the reduction in interest payments on that saving will add up to tens of thousands of pounds.

If the current state of the housing market persists, as is predicted by most experts, then the days of climbing the property ladder on the back of rising house prices are over for good. If this is the case, and we are indeed in a new era of more stable property prices, then, just as in continental Europe, building, along with conversion and renovation, could be one of the few ways left to move up the property ladder and work your way up to that 'dream home'