We talk about digging out all the costs of Self Build as the up-front costs sometimes blind us to the true total cost.
When looking at ballpark figures for self build, it may seem that the headline figures of land purchase and the house construction cost are the only ones that matter. However, there are lots of potential minor costs that can mount up to a frightening total if they are not recognised and managed. Here are some examples that we dug up:
This is probably the most common, and largest, hidden cost of self build. It is foolhardy to commence a house build without proper investigation of the ground conditions. Even where such investigations are carried out, it is no guarantee that the actual ground conditions across the entire have been accurately mapped. Trial holes that are dug or bored are only site samples and it is entirely possible to miss underground streams, old ponds, patches of made-up ground and pockets of unstable ground.
If only minimal prior ground investigation is undertaken, you could be in for a shock when the actual foundations are dug. If what is experienced is totally different from what was expected, it may require a re-think of the foundation design. Remediation could be as simple as digging a little deeper to reach firm ground or, if you are unlucky, it could require a more expensive solution such as pile and ringbeam foundations.
It’s often overlooked that where adverse ground conditions require additional excavation, the soil disposal costs will increase proportionately.
Connection Fees for Utilities and Services
These fees are for connecting the services from the roadside to your property:
During the Build, electricity and a mains water supply will be very useful on site. Telecomms cabling and gas pipes are not so important. If there are no fixed services on site, a temporary supply can always be arranged by hiring generators and water bowsers.
The costs start to mount when there are no fixed services to your site and you need to arrange new pipework or cabling from the nearest connection point. There’s no guarantee that you will be able to tap into the services of a neighbouring property at a minimal cost; the nearest connection point may be hundreds of meters away. If the nearest property with services is across the road, you may find that you have to pay for road closure costs, which could include the provision of temporary traffic light services. Where the nearest drainage pipes are uphill, it is likely that you have to pay for pumping costs. The distance away from connecting services will dictate what diameter pipes are required and what depth they need to be laid, all adding to the total cost.
labour on site
When you employ contractors on your site, you have to comply with Health and Safety regulations. You will incur costs for site protection, the provision of secure lock-up facilities, a site office and toilet facilities.
Surveyor and Engineer’s Fees
These fees don’t come cheap. For every survey you commission, budget between £600 and £1000.
The most common surveys are:
- Boundary survey
- Site survey
- archeological survey
- soil investigation
In the unfortunate case where you have contaminated soil on your site, the resulting remediation measures could be eye-wateringly expensive. The remediation works and the series of surveys and reports that will be required will also seriously delay your build.
Plot acquisition fees
These fees can be anticipated:
- Estate Agent
- Stamp Duty
- Land Registry Charges
Delays in materials, plant and labour
Delays can occur in a myriad of ways, many having unexpected ripple effects to the build schedule.
Materials could be delivered late, not just hours but days, weeks and even months. This is the case with glazing manufacturers where it is not uncommon for the glazing to arrive 3 months late. If there are contractors on site waiting for the materials, they will expect to be paid for waiting around. If they are no longer available when the materials arrive, new contractors will have to be engaged, perhaps at a higher rate if the contracted period is shorter.
Thefts of tools, plant or building materials could occur, possibly with the entire site being stripped bare. Your self build insurance policy should provide cover in respect of Contractors All Risks, Public Liability and Employers Liability (where you employ people on site). Although a comprehensive insurance policy will normally cover theft from site, there is always an excess to pay, the first few hundred pounds.
The consequences of any of these incidents are various and invariably costly. There is an extra cost where scaffold or plant hire is extended because of the consequent delivery delays. If temporary accommodation is rented, a delayed completion date means extra rent is paid. On the occasion when bank loans are used, the extended build schedule means additional interest payments.
Most timber frame manufacturers issue a base specification together with a base price, with options to upgrade specific items to a (usually) superior quality. You should ensure that you have received an updated specification for your project that includes all upgrades and all upgrade prices.
It is often very difficult to purchase the exact quantity of re-claimed materials and these often carry a premium. The result is a high percentage of wastage as over-ordering is the only way to ensure delivery of a sufficient quantity. Even new materials are subject to wastage as the manufacturer may not be willing to sell or deliver small or part-loads. A shortage of storage space on site means that excess materials need to be removed promptly, often at a cost.
Changing the design after the build has started will inevitably result in additional costs, known as “extras” in the trade. The best way to control extras is to ensure there is a process in place to price, document and approve the extras, possibly using an Extras receipt book that is accepted by all contractors prior to starting work.
However, avoidance of extras is the best policy and every effort should be made to:
• Finalise the design in utmost detail, deciding all materials, fixtures and finishes in advance of getting in quotes.
• Ensure all decisions are enshrined in the design and specification
• Resist the temptation to make any changes once building has started
In practice, some changes will occur but if the above steps have been taken, it is likely that any changes made will only be small ones.
Recovering VAT paid on Building Materials
Thousands of pounds could be lost by not recovering the VAT paid on eligible items of building materials. There are several ways in which the refunds could be lost:
• Being unaware that Vat is recoverable on re-builds but not on renovations, no matter how extensive the renovation
• Ignorance about which items allow the VAT recovery
• Failing to claim the VAT in time
• Not keeping the VAT invoices
Find out more on the HMRC website.
Building Regulations Fees
Each time that you arrange an inspection, you will pay a fee.
In addition to the cost of temporay rented accommodation, consider whether you wil need to pay for furniture storage if the temporary accommodation does not have storage space.
Access to public road
You will need to apply to the Local Authority for a dropped kerb if it doesn’t already exist. As the work can only be done by contractors approved by the Local Authority, expect the bill to be jaw-dropping. If work is required to connect to sewers located within the highway, expect some high costs. If you are on a busy road and temporary traffic lights are required, expect costs to double.
Scaffolding and Plant Hire
The standard rates quoted for scaffolding are only valid for standard flat sites and standard ground conditions. If you have a sloping site or unstable ground conditions, there is likely to be additional charges for set-up and/or an increased level of security.
Prior to the build starting, the hire costs for scaffolding and plant hire might appear reasonable. Unfortunately, the build schedule invariably slips and the additional hire costs might end up way past the original figures.
You need clarity from your architect on what is chargeable and it is important that all fees and expenses are confirmed in writing. If you have agreed a percentage of the build cost (which is not recommended!) you should obtain a breakdown of activities, which could include desk research, design, production of plans, additional copies of plans for contractors, colour elevations, 3D models, site visits and correspondence. It’s often the case that lower fee rates are applied where the architect or designer uses junior staff for the more menial tasks.
When you fund a new build with a mortgage, a whole array of fees is payable. These might include an arrangement fee, mortgage guarantee premiums, life insurance premium, valuation fee, interim inspections fees, broker fees.
You will need to pay for buildings warranty.
If you have to change lenders for any reason, you need to be aware that you might be liable for redemption penalty charges.
When you borrow money, interest is due.