Tell me about self build!

[BazaarMum]

We are looking at a plot and seriously considering a self build. Probably an oak frame ‘kit’ of some kind, using the kit company’s project management (ideally, depends on cost - we’re capable of doing it but I’d have to cut down my work to do so).

Our ideal scenario is to buy the plot and get all design, planning permission and site prep done before selling our current house. This would involve an additional mortgage for the site purchase which would be affordable short term.

I’m looking for experiences on how the funding of self-build works. There is a house on site but it’s not habitable so we’d demolish it. Would second home stamp duty apply in this case? We will not be using it as a second home, as soon as we can start building we’ll sell ours to release the cash and move into rented for 6-9 months.

We’d release a good chunk of equity when we sell our house so would have a mortgage on the plot, then use cash from the house sale to do the build. We’d end up with a similar mortgage to what we have now. I’m concerned that the bank won’t mortgage a house that we are planning to demolish and redevelop, though. The finished house would be in a very sought over and desirable location so hopefully chances of over developing the site are slim and we’d make money.

Any insights or advice? Thanks if you waded through my ramblings 😊

Bump 😬

We are looking at something similar. Which companies have you looked at?

There are specific mortgages for self build - you draw down the money as the build progresses. eg acquisition of site, first course above damp course, watertight, first fix second fix and completion. The aim is to have more value in the ground than the loan value.

Also look at your local authorities website - they have a duty to self build that includes keeping a register of sites. This takes some of the planning risk out of the scheme.

For stamp duty - www.gov.uk/stamp-duty-land-tax
It does not appear to be exempt.

cresci just our current mortgage lender, as in effect we’d be taking out another mortgage on a ‘second’ property to enable us to stay in our house while we getting planning through. If we couldn’t get a four bed house of the right size approved, we’d sell the plot on with planning for whatever we could get through and continue looking. If we got planning we’d sell our house and fund the build with equity.

My concern is how banks look on the purchase of a house which you only intend to demolish. The house is, in effect, not salvageable, but I suppose there is one there. I assume the key would be not to pay more than a cleared plot would be worth according to the bank surveyor?

The vendors are pricing it as if the current house could be renovated. It REALLY couldn’t and should only be being sold as plot.

unescorted thank you, I’ll look at the register snd study that link. I fear we’d be in for the stamp duty and therefore that risks losing money if we can’t develop the site as we’d want to and have to sell on.

You can pay to talk to a planning Officer about any site. Do that. You will then know what you are likely to get before you buy. Often it’s not number of bedrooms but floor area or volume that’s restricted. It’s up to you how you use it. You are often allowed basements to add extra.

It’s also possible to extend a new house. Various neighbours have done this. So you get your extra space with a second build so to speak. Some councils don’t care much about what you build and have few restrictions. Other areas might be green belt or an AONB and that changes things. You can find out all of this before you buy.

The price of the plot is what you negotiate. If it has a property on it, it’s a second house. Sell your house and live on site in a mobile home. That will need permission but you should get it. That saves tax.

bubbles that sounds like an excellent idea. Do you know what a planning officer might charge?

We have a lot of kids (!) so caravan on site unlikely but could rent. I suppose the idea of selling our home to buy a plot without guarantees is my big fear, here. It might be that the £20k additional stamp duty is something we have to factor into our offer as a risk factor.

sell & rent before buying would be one way of getting around 2nd house stamp duty.
I second talking to your local planning office - there is some political pressure for Local Authorities to facilitate self build. Some will charge for a pre app meeting. Read the local planning documents - again on the LA website. There is no point buying a small house in the greenbelt thinking you are going to extend to the outer reaches of the plot and build to 3 storeys.

I know next to nothing about self build, but for all homes, if you sell your previous main residence within three years of buying your ‘second’ one, you can apply for a refund on the stamp duty. So just depends whether you stump up the cash upfront, and afford to do the build before you reclaim it back. Info here: www.gov.uk/government/publications/stamp-duty-land-tax-apply-for-a-repayment-of-the-higher-rates-for-additional-properties

Thanks JimmyJazz that is really useful info!

unescorted the plot is in the green belt, and there is a tiny two bed cottage that’s been there since it was a farm workers 2 up, 2 down. The plot is quite big with several outbuildings on it. All around GIANT houses have replaced former dwellings but the plots are much bigger. It’s sometimes hard to believe green-belt/conservation restrictions have applied to some of these.

I’m wondering if it’s to do with the relative size of the plot? Big plot = giant house as long as it’s situated in the plot in the original spot?