When looking at the costs of a 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. Examples are:
This is probably the most common culprit for hidden costs 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.
When the actual foundations are dug, what is experienced could be totally different from what was expected, requiring a re-think of the foundation design. Remediation could be as simple as digging a little deeper to reach firm ground or it could require a more expensive solution such as pile and ringbeam foundations.
If adverse ground conditions require additional excavation, this will add to the soil disposal costs.
Electricity is useful on site, water is essential and telephone and gas are not so important. Do services exist on site? Are they next door? Across the road involving the installation of temporary traffic lights? 25 m away?100m away, requiring larger pipes? Have you considered whether the drains are running downhill or uphill?
Labour on site
Secure site compound
Site office, storage container, toilet facilities etc
Connection Fees for Utilities and Services
- Surveyor and Engineer
- Boundary survey
- Site survey
- archeological survey
- soil investigation
- Plot acquisition fees
- 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. Contractors awaiting the materials will have 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. If scaffold or plant hire is extended because of the consequent delivery delays, this is an extra cost. If temporary accommodation is rented, a delayed completion date means extra rent is paid. If 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
- Not knowing which items allow the VAT recovery
- Not claiming 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 designer 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 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.