Costing a Self Build Home - Part II
Theft and Vandalism on Your Building Site From £400 +
Replacing lost or stolen tools, or building materials should be covered by your site insurance policy, as will the repair of vandalised work. The cost of the excess must be met for each claim though. The excess varies between insurers but is typically at least £400.
Time lost in waiting for replacement materials will not be covered. Certain subcontractors might not be able to wait for new materials and may well have to move on to another site - site security should be taken seriously.
Additional Work Discovered in Progress £100s +
Building a new home should not mean too many nasty surprises other than work below ground.
Self builders renovating, converting property cannot be so certain. It is relatively easy to assess the condition of the basic superstructure and cost out the necessary works, leaking or blocked drains can cause subsidence that may only become apparent when the site is cleared. Underpinning is a difficult job and can cost around £500/m at a depth of one metre. If traditional materials are used, such as lime plasters or renders, then shortages of skilled practitioners may increase labour costs or mean waiting for long periods.
Connection Fees for Utilities and Services From £1,800 +
Privatisation of utility and service providers have caused complications when seeking a new supply of services. Whilst there are scales of charges for a new water supply, a temporary stand pipe and the right to connections to sewers, electricity and gas suppliers quote each individual situation separately.
Suburban plots or sites in a large village with most main services, quotations for supply of water and the right to connect to a mains sewer can cost between £500 and £700 in addition to the cost of any associated work to the public highway. Gas can vary from a few hundred pounds to over £700 and electricity from £500 to £1,200. The cost of a new domestic telephone line is about the only constant with a price of £74.99.
The cost of installing and availability of the essential services to a more remote location can be vast and should be researched before building commences.
Extra Building Costs Due to Amended Plans potentially £1,000s
Building work not itemised in the original contract price is known as an 'extra'. The cost of extras can total £1,000s on top of a 'fixed' contract price, depending on the number of changes or additions to the original plans.
Be sure that every detail is finalised and described accurately within the plans and specification to minimise extras. Choose all of your materials, fixtures and finishes in advance of getting in quotes. Allow for extras within your budget contingency.
When you agree a contract with your builder, discuss the basis on which extras will be handled. Agree a price for labour and any materials before each extra is carried out.
Non Recoverable VAT on Building Materials £1,000 +
Most VAT paid on materials for a new dwelling, including conversions, can be reclaimed on completion of the project, with certain notable exceptions. These include VAT on professional fees (unless included as part of a design and build contract); VAT paid out on the hire of plant, scaffold and machinery; VAT on delivery and pallets (returnable or not) and any VAT wrongly charged on labour and materials supplied by builders or subcontractors that should have been zero-rated. Details of work eligible for VAT relief are available in HM Customs & Excise VAT Notice 719, 'Refund of VAT for DIY Homebuilders and Converters', and VAT Notice 752 'Land and Property'.
Renovating or restoring an existing dwelling will not be able to recover the VAT paid out unless it has been empty for the last ten years - in which case it will be treated as a conversion. If the dwelling has been empty for at least the last three years, in which case the rate will drop to 5% providing the work is handled by a VAT registered builder - there is no DIY VAT refund scheme for renovators equivalent to the one for self-build and conversion. Nor is there a DIY VAT scheme for those undertaking 'approved alterations' to listed buildings - which are also eligible for VAT relief, but only via a VAT registered contractor or subcontractors. Details are given in VAT Notice 752 'Land and Property'.
Higher Building Regulations Fees and Inspection Charges £400 +
In Scotland the fees for the Building Warrant, including the necessary inspection charges, are paid at the time of application. In England and Wales the fees are paid in two separate parts; on application and then when inspections are required. This often leads to a misunderstanding: the self-builder, believing that they have paid their architect or designer for the fees, then receives an unexpected bill from the local authority.
Charges for Building Regulations applications and inspections vary from authority to authority. The norm is £140 + VAT on application plus £265 + VAT for inspections for houses of up to 300m2 and not more than three storeys. If the house exceeds this size then the fees are assessed on build costs and can rise, subject to the discretion of the Building Inspector, by up to 50%.
Accommodation and Furniture Storage From £200/Month +
If you are living in your old property during the construction of your new home, then whilst you might not have additional living costs you may well have to include interest costs on any additional borrowing. If you have decided to sell up and move into rented accommodation then be aware that the monthly rent might be more than your normal mortgage costs.
Most properties are let on a shorthold tenancy agreement for six months, extendable thereafter on a monthly basis, but sometimes the landlords will require a new fixed term agreement.
Those living in mobile homes will be best off but will have to include purchase and setting up costs within their cashflow projections, although much of the purchase cost might well be recovered upon resale at the end of the project. If you are in a mobile home or in furnished rented accommodation, don't forget to include the costs of storage, which for an average four bedroom house can be around £200 per month.
Find out more about self build costs in part III
