Many of our clients dream of building a house, and although it can be both exciting and rewarding, it is a significant investment. Ensuring you know and stick to your budget when building a house is key to completing your project successfully. This is why the first question many would-be home builders ask before planning a project is, ‘how much does it cost?’ – unfortunately, there’s no one formula that can help you to work this out.
Many variables need to be taken into account when estimating your costs, and it’s always a good idea to have more money than you need for any unexpected changes and obstacles that could present themselves. There are things that will cost you more money, and considerations you can make beforehand in order to save money. There are also some elements that you should not attempt to save and cut corners on, such as quality architecture.
To give you a general idea of how much this may cost, a new build home in London or the South East may cost from £1,750 per m². There are land acquisition and professional fees to take into account on top of this.
Challenges and issues that are relevant to your project may bump the costs up somewhat. In London, several of the below will likely apply, and if they do then you can expect a minimum of £2,000 per m².
- Party wall or site organisation issues, making the project challenging for the builder.
- Difficult site access.
- Parking permits.
- Foundations, for example, is underpinning required to the neighbour’s foundations?
- Postcode pricing, where contractors cost more in specific boroughs.
- Kitchen specifications, e.g. a brand name kitchen is required.
Of course there are many more considerations that can affect the cost. In some cases, fees can even reach £4,000 per m² if the highest quality finishes are required. These costs are for construction only, too, and there are additional costs you will want to consider in the process of working out your budget.
Other costs that you will want to consider when figuring out your financial needs:
- Solicitors fees
- Survey fees
- Stamp duty land tax
- Finance costs depending on the amount of loan required
- Consultation fees (vary on the complexity of the project)
- Structural engineer
- Services consultant
- Approved inspector
- Party wall surveyor
- Site purchase cost
- Special foundations
- Timber cladding
- Additional luxuries
- Landscaping requirements
Although there are many costs to include in your budget, there are also tax benefits for new builds that could be taken into account during your decision making process. They include:
- Stamp duty – buying a plot of land will usually mean making a stamp duty saving when compared to buying an existing home.
- Planning contributions – they can vary, but in London many local authorities require financial contributions to help them build affordable housing elsewhere in the borough. Usually, they do not apply in outer areas, and central zones have the highest costs.
- VAT – not payable on the construction costs of a new build house
- CGT – if the house will be your principal private residence, there is usually no capital gains tax to may if you make a profit when you sell a new build house
Ways You Can Save Money During The Process
Of course, there are precautions you can take during the process to save money. You don’t always need to opt for a brand name kitchen, for example, and going somewhere more cost effective to get the necessities can be a good idea. Providing you select high quality materials and a nice finish, it shouldn’t make too much of a difference to your completed project. However, where you want to save money will depend on what your goals are.
Ways to save money include:
- Selecting a large site with free parking and enough space for storage and efficient construction
- Ensuring cost effective blockwork throughout
- Using cost effective brands
- Going to IKEA for your kitchen
As you can see, how much is costs to build a house can depend entirely on the specific project, materials needed, tax exemptions, and even the specific borough. By considering all variables before you begin your project and using them to figure out the sum you will need, you’ll be able to begin planning your project in a way that suits your finances. Bear in mind it’s always better to have a little more available for emergencies and unexpected costs.
This guide is suitable for anyone requiring consent from the local council to alter a home. It reviews the ins and outs of UK planning and strategies for successfully navigating it, based on our own experience.