It All Starts with Budget

2 January 2015 David Snell

It All Starts with Budget

...and indeed it ends with the budget as well, because a successful self build is one that comes in on time and on budget.

Budgeting is not something that you think of once and then forget. It is an ongoing process which has to be honed and refined throughout the project.

Budget Preperation


From the very first thoughts of self building it’s necessary to consider just how much money you can afford to spend on the project.

This will be made up from your savings, any equity you have in your current home, and the amount you feel that you can successfully borrow. That’s your total budget and, for most people, that is a finite amount.

One of the great advantages of working with a package deal company is that they will have a vested interest in your self build going all the way to fruition. They don’t just draw pretty pictures of houses and get paid for it.

Their interest is in you being able to buy their complete package. And therefore they will intrusively question you and use their experience to make sure that whatever you set out to build can be built within your budget.

Additionally, they will be concerned that your chose design is physically capable of being built on your plot and that it will find favour with the planners.

The Plot

The first, and perhaps the biggest, expenditure will be the plot. In some areas, where house prices are low, that may be around a quarter of the eventual value of the home. In high areas, it may be two thirds or more the end value.

So how do you value a plot?
The answer is that any plot gains its value from the home that could, or should, be built upon it. You need, therefore, to understand values, and the you need to learnn to do what any developer does when they see a plot, which is assess each element of the project and relate it to the profit or margin to be made. 

Most self builders don't set out to make money. Instead they set out to build the home they want for the money they've got and the fact that they make money in the process is almost incidental. But profit is an important reqard for all the hard work that you'll be putting in and its existance will mean that you're not building in negative equity.

Visit our case study section to see the value of our customers finised homes. Always do your sums. You can look up the average build costs tables in various self-build magazines, you can also refer to Potton's Budgeting Guide available to download here or pick up at the Potton Show Centre.

Self-Build Plot of Land

Valuing Land Formula

Land costs (A) + Build Costs (B) + 20/30% Margin (A+B x 20/30%) = End Value (C).

Land cost £200,000 + Build cost £300,000 + 20% margin £100,000 = end value £600,000

Design to the Budget

houseplans and hands

Once the costs of buying the land are deducted from your total budget, you're left with your build budget.

When you prepare your 'wish list' of things that you want for your new home, write them all down and then leave space at the top for the most important elemant, which is of course, the budget.

There is nothing sadder than going all through a design process, falling in love with a particular concept, and then finding out that you can't afford to build it. Only work with architects or designers who understand costs and can relate whatever they draw to your budget.

Package and timber-frame companies are particularly good at this and will be concerned, throughout the process, that whatever they are proposing will be capable of being built within your budget.

Keep on budgeting

It's not a one-off thing. You start with a preliminary budget. You have the initial desing drawn up and you relate that to the budget before you go awny further. If all seems okay, then you move to the planning drawings and then, if any changes occur, they have to be related back to the budget.

As soon as you've got detailed dimensioned drawings, get an estimating company to prepare a full costing and, once again, relate that to your budget.

Each time there is a change, either elective or brought about by circumstance, it must be referred back to the budget. If something is more expensive then something else has got to give. If something is cheaper then, maybe, you could increase what you spend on other items. But don't rush to do so as the savings may come in handy further down the line.

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Top Tip!

Include a sensible contingency figure

A contingency figure of at least 10% is generally recommended. Don't use this money to pay for increases in specification or changes in design. If you do then you are likely to find that you will not have enough money to cover those truly unexpected events!

Garages and Outbuildings

The garage is often the Cinderella when it comes to budgeting, almost forgotten, as if, somehow, it'll come for free. It doesn't. Garages and outbuildings can be quite expensive. If your budget is tight, consider whether these can be left to another time when, perhaps, finances are not so stretched.


There will be extras. It may be a few more power points. It may be fitted wardrobes or expensive floor or wall tiling. If your budget can stand them then there's nothing wrong with the project evolving. But don't get caught out with a huge bill at the end of the project which you can't afford to pay.

Never allow any extras to be enacted without a written price being given and your agreement to it, prior to the work being carried out.


Throughout any self build there are going to be contingencies. Some things are going to cost more.

Bad ground can crop up unexpectedly espire intrusive surveys. Bad weather can extend the time line. There is nothing you can do about this other than maintain a tight mangement strategy and have a contingency fund of around 10% for most project and 20% for those where there are known site problems or where you're planning a basement.

Self-build projects often have cost overruns. Something these are due to unknown factors but, often, they're due to elective factors such as more expensive kitchen units or bathroom suites. And that's what the contingency is there for.

Very few self-build projects end in financial disaster as long as the budget is kept in mind. Those that do overrun on cost are usually save by the margin or profit that is built into every properly conceived project.

Next Steps

Remember, you can refer to the Potton Budgeting Guide available to download here or pick up at the Potton Show Centre. If you have a project you'd like to discuss with a Self Build Consultant then please get in touch via our online form or email

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