When you start building your own home, it might be tempting to envision a grand design, with any number of unique and exciting (and expensive!) gimmicks and gizmos – after all, this is your dream home, so why not right? Whilst of course it is exciting to have the opportunity to build your own home exactly how you want it, it is also important to recognise that, as with any large scale project, it is very easy for the costs to add up and become far more expensive than you planned for if you don’t keep on top of it. Here are some of our top tips to help you keep control of your costs.
- Decide on your budget before you start, and prepare a contingency fund
Deciding on how much you want to spend in the first place is the most important first step – setting a realistic budget will help you effectively plan your spending and manage your money from start to finish – for a simple example, say the equity in your current house is about £300,000, and you are able to borrow another £100,000 – this would very roughly give you £400,000 to build your home. Review your budget at each stage of the build, as the project progresses you may find that spending priorities change. It is important to keep your budget somewhat flexible, so that you can rework it as needed to ensure that is stays on track.
We also recommend that at least 5-10% of your budget is held back for contingencies. During the build, things may go wrong – mistakes in the build, material prices fluctuating, problems on site and any number of other problems. Being prepared with a contingency fund will ensure you don’t end up too far out of pocket if something goes wrong.
On the flip side, you may find that some aspects of your build go very well, and that you actually save money on what you originally budgeted. You might be tempted to use the extra money to treat yourself since the money was budgeted away anyway, but by saving this as extra contingency you can make doubly sure that you don’t go over budget.
- Get quotes and solid costs agreed in advance and watch out for hidden extras
A quote is an agreed, fixed price for particular materials or jobs. Quotes (unlike estimates) are legally binding, and so getting quotes in advance will fix the price of the materials or projects being undertaken, giving you a better idea of the exact costs before you start. Be sure to shop around and get quotes from several different suppliers and contractors to make sure you are getting the best value for your money.
It’s also important to keep an eye out for any hidden extra charges – there can be many in construction, from utility connections to landscaping insurance. Make sure you get correct and in-depth investigations done early to minimise additional costs. Where these are unavoidable, get these costs agreed and fixed in writing to avoid any unwelcome surprises.
- Avoid sunk costs where possible but don’t be afraid to go back to the drawing board
A sunk cost is defined as a cost that has been incurred and can never be retrieved, either in full or in part. An example of a sunk cost when building your own home might include the cost of landscaping the site in an unsatisfactory way, necessitating further landscaping to make it right. Being vigilant and doing the proper research beforehand can help you avoid sunk costs like these.
That said, if a certain aspect of your project is starting to get out of hand cost-wise, don’t get sucked in by the sunk cost fallacy and throw good money after bad – don’t be afraid to go back to the drawing board to rework or redesign as often there is a cheaper, more effective solution that can be found.
The universal truth – the more complex something is, the more it will cost to make happen. The most cost-effective build is the simplest build, a box with a roof. Adding extras, like balconies, curves, structural glass etc. will add to the cost. If this is what you want and your budget can handle it, then absolutely go for it. However, if you want the biggest house and the most space for your money, keeping your design simple will get you the most bang for your buck.
If you choose an optimal structural system and have your home built to a high standard initially, you can save yourself money in the long run by avoiding complex heating systems and so on.
The premier example of this is building to Passivhaus standard. Built with excellent insulation and airtightness, and using a Mechanical Ventilation with Heat Recovery system (MVHR), you can almost eliminate the need for central heating entirely, being able to fully rely on a few electric radiators around the home for the coldest days. The outlay might be slightly more, but overall, you will be saving a lot more money on energy bills year on year which over time will more than make up for the initial outlay. (At Beattie Passive we specialise in building high quality homes that go beyond Passivhaus standards and can reduce your heating bills by up to 80%).
If you’re looking to make savings on your build, it’s best to look for them on things that are easier to change at a later date (e.g. kitchens, decorating, bathrooms) – invest in the fabric of your building first and foremost, as this is incredibly hard (and expensive) to change later down the line.
Whatever your budget size, and however prepared you might think you are, any project is likely to throw any number of curveballs, so making sure you have every avenue covered should help you avoid any unwelcome surprises and smooth the way to the home of your dreams.
The UK is a big place, and a countrywide plot search would probably be quite overwhelming and would stretch your resources too thin. It goes without saying then that it is a good idea to decide on at least a couple of ideal locations to build your new home before you start. This will keep you focussed and help you identify sites that are at a distance away from major roads, schools, shops or other amenities that suits you. Search the area and keep an eye out for suitable build sites, including disused sites and even plots with a damaged/abandoned building which could potentially be demolished to make room for your new home. It is important to be open minded though and keep a few areas in mind in case it turns out that there are no plots available in the area you are searching in.
