Working out whether you can afford to build your own home is the first major step in self-building. But with so much to account for and with so many factors that might impact the price, it’s not an easy question to answer. Here are some tips to help get you started.
Before you go full steam ahead, remember that building a house is an investment. That means, all being well, you should be creating value as well as spending money. It’s possible to generate a profit of up to 15% to 30% from building your own house.
What can I afford to build?
To answer that, you’ll first need to talk to lenders and other financial specialists to gage the amount of funds you have available and the amount you could realistically borrow. There are many items your budget will need to cover outside of the cost of building the house itself. For example, you’ll need to account for the cost of buying the plot including any stamp duty charges. You can find out more about UK stamp duty charges visit the government Stamp Duty Land Tax advice.
It would also be wise to factor in connection costs for services like electricity, water, broadband and telephone. This will vary according to the amount of work needed.
Do your research
A good way to work out your budget is to take a walk around the homes at our Self Build Show Centre. Ask yourself, is this the type of house I want to live in? How would I personalise it to suit me and my family? Once you’ve figured out your size and style of home, you can adjust our guide costs to incorporate the personal touches.
You can browse a range of Potton homes and filter your search by design style and build cost. This should help you to get an idea about the size of home you could build for your budget.
Financing your self build
The initial cost for a self-build is purchasing a plot of land to build on. After that first outlay, you’ll need to focus on finding funds to construct the house itself. Don’t worry, it is possible to get a mortgage on a self-build that will carry you through the process. You can read more about those in our helpful self-build mortgage guide.
Managing the build
Once you know the budget you have to work with, and have a rough idea of what you’d like to build, the question is how you get it built. Our budget guide is based on managing the build yourself. However, an increasingly popular option for self-builders is to employ a project manager who then coordinates the build for them. Depending on the level of service required, the cost of employing a project manager could be in the region of 8%-12% on top of the guide costs we’ve provided. If you choose to work with a builder or main contractor, their costs will be higher again.
Think about your location
You’ll also need to consider where you’re building, before a build budget can be finalised. For example, building a home in the south east of England, with higher living costs, is more expensive than building in the North East, as labour is generally less expensive. This is simply because the trades working on your home will generally live within an hour of your site and the price they have to pay for their own homes will reflect the prices of the local market.
Finally, don't forget to include a sensible level of contingency within your build budget. This helps you account for the complexity of your design and unforeseen costs that may arise throughout the build.
We have included a 5% contingency within our budgets. Using advanced off-site manufacturing techniques will undoubtedly be less risky. As costs are calculated before manufacture compared to building a masonry house on site. The level of contingency you should include will also depend on the complexity and risk involved. If you require a self-build mortgage, your lender may require a contingency as high as 20%. This will reflect construction inflation as well as reduce their exposure.
Guide build cost comparisons
Putting together a budget to build your home can be tricky. Every family will have their own unique set of desires and requirements that influence the cost. Until your design has been developed and you’ve decided on a route to completion, you can only work with generalities and previous examples.
To illustrate this a little, some people will want a high end, bespoke kitchen, while others will be happy with something more modestly priced based on standard components. Some view a staircase as a functional piece to move from upstairs to downstairs. Whereas others see it as a spectacular statement that sets the tone when visitors arrive.
There are many factors which can affect your building cost estimate and have a significant impact on project cost. Some to consider are:
- Site investigation, demolition, site clearance and new utilities.
- Substructure, foundations, drains, insulation and floor slab.
- Superstructure, external walls, internal walls, roof structure, insulation and air-tightness.
- External finishes, roof tiles, doors and windows, wall cladding and gutters.
- Services and fit-out, plumbing, heating, ventilation, electrics, doors and stairs.
- Decorations, plastering, finishes, flooring, tiling, sanitary and lighting.
- Patios, paths, driveway, planting and landscaping.
- Site management, welfare, health and safety, scaffolding and fencing.
Please be aware that there are situations, not mentioned here, where further costs might arise due to unforeseen conditions on your site. These might include but are not limited to sloping ground, poor ground or structural conditions and contamination, all of which will be taken into account when progressing with the project.
Where Is My Budget Spent?
To help visualise the costs involved in a typical self-build, take a look at the chart below based on our Caxton show home.
Source: Michael Holmes Jan 2022, Homebuilding & Renovating, How much does it cost to build a house?
The two highest costs on the chart are the superstructure and foundations. You should expect your superstructure to take up about 25% to 30% of your available budget as it includes the shell of your house: the walls, external cladding and roofing. The cost depends on the size and type of system you’ve decided on.
Remember that the key to budgeting is adaptability: if something costs more than you expected, it may be possible to cut your spend on something else to make up for it.
At Potton, we have helped thousands of people create their dream home. If you need help costing your self-build, we have an experienced team on hand to provide advice and support.