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 £2500-£3000 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 £3000-£3500 per m². This depends on many parameters such as complexity of the design and structural scheme, level of finishes fixtures and fittings and level of sustainability measures implemented.
- 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 £4000 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
Adding Value to your Home
There are many ways in which you can add value to your home throughout the project.
Some architects and Design & Build companies can build in and around London for £1700 per m², however, to fit within this budget it would need to be based on a simple template with standard material finishes, fixtures and fittings. For efficiency and cost savings, often these architects and Design & Build companies will work with a few pre-defined options and allow a variable degree of customisation.
This may be explicit and shared with you before you start or it may be occurring without your knowledge. This approach will never be able to create a tailor-made solution, designed carefully around your lifestyle requirements and aspirations which almost defeats the purpose of embarking on a self-build project. We find that our clients will often take on a self-build project to design a house around their requirements. A self-build home should mold itself around the scenarios of your life and not the other way around.
We will often speak to our clients about the balance between spending more on the build which will pay back over the years later. These create an optimised scheme which carefully balances between requirements, aspirations, budget, planning and sustainability restrictions. Attempting to recover the re-sale value on day one is unrealistic with a bespoke design which is why we don’t attract property developers as clients. We are called scenario architecture because we look closely at your own life before designing a home, a process which only lends itself to the person who will occupy the house.
When it comes to installing a kitchen, utilising the tradesmen on site to create a bespoke kitchen can often be competitive to a high-street company. The quality is greater and it’s entirely bespoke which can add value to your home.
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.