Tag: quantity surveyor

HPH253 : Would property investors buy sustainable homes? – with Rob Bence

Property developer and podcaster, Rob Bence, advises on what’s needed for undertaking a successful building development project.

Exploring a new House Planning Help construction project

For the last 6 years we have been following House Planning Help founder Ben Adam-Smith on his self build journey. Having completed this in 2018 Ben is now beginning a new chapter, to deliver a small scale development of high performance, ecological homes.

As with his self build, we’ll be sharing the highs and lows right here on the podcast. So in today’s session, we look at whether it would be a good idea to target our development at property investors.

Interview with Rob Bence

The Property Hub, that Rob Bence started with Rob Dix, has come a long way from its beginnings producing the weekly Property Podcast. By engaging with their listeners they built a website and forum where they could interact and learn what the needs of the community were, and build their business accordingly.

Being self-confessed control freaks has helped their business develop!

The first stage of their business was about sourcing properties, where they often worked with developers.

The natural next step was setting up a letting agency, enabling them to be in control of the service levels.

Feedback from the community was that they couldn’t get good tax advice, so a tax business came next, with a mortgage service also later being brought in-house to ensure they had control over the process.

The development side was almost inevitable:

“And I think because we’re control freaks, we thought, we’re doing all of the other stuff. If we can build the product and then have it exactly as we want it and build it as we would choose, then we can control the whole process and the whole service journey from start to end.“

No property will appeal to all investors

Rob doesn’t believe that building sustainable homes would appeal to all property investors, but some are becoming increasingly interested about offering a better service and product to their clients, rather than just being focused on yield. So while it may not yet be mainstream for a tenant, there is likely to be a greater demand from investors in the future.

Investors want hassle-free properties

Ultimately, investors want their properties to be let quickly, and with as few issues as possible. A well-built home should make the latter more achievable.

They also want the home to be desirable, so the periods where it is standing empty are kept to a minimum. And being a long-term investment, they are looking at capital growth.

Rob thinks that unique, sustainable homes that are built to a higher standard will perform better from a capital growth point of view than cheaply built homes that will start to look tired after only a few years.

Ask letting agents what typifies their best performing properties

As they’re dealing with investors and tenants on a daily basis, letting agents are best placed to understand what makes a property desirable in their local area.

Often it might come down to proximity to schools, transport links, and other amenities more typically found in the city centre, but actually there is plenty of opportunity to build investment properties in the suburbs.

“When you look at the rental market in suburban areas where people do want to rent, it’s often people’s homes that they’ve moved out of. They’re not professional landlords, it’s just they’ve moved on. And often those properties are tired and dated, and I think there’s an opportunity for high quality new builds to really stand out.”

Alternative financing options may be better than banks

If you already have construction experience then peer-to-peer lending might be an option to finance the development. They like to see a track record, so at the very least work with a team of people who do have experience in order to build your track record another way. If it’s your first project then rates might be a little higher, but they can be flexible, willing to lend and able to allocate the money quickly.

Beyond that, Rob suggests working with a finance broker (as opposed to a mortgage broker), and always going with recommendations wherever possible.

Rob advises trying either of these two options to finance the project, rather than using banks. He says banks may lend to you but will want so much security against the development that you may as well fund it yourself.

There are pros and cons to selling a development upfront

Rob thought that agreeing a price and selling developments upfront would impress lenders, but he says actually this is not something they are that concerned with.

What has worked well for them is getting their ‘exit’ out of the way early in the process so they know they have the money.

What it does mean however is that you’re locked into a price and could fall foul of rising build costs, or miss out on capital growth from market changes.

“So, it’s great and it’s nice from a security point of view, but there are some downsides. And you make a choice. You can sell them at the end and not have that security but then possibly get more of an uplift, or you can just lock-in today and know what you’re dealing with.”

It hasn’t all been plain sailing for them so far

Property Hub Homes made a loss on their first development but were lucky their other businesses were doing well and could absorb that loss.

They found it a painful experience but learned valuable lessons. Rob says that while they made lots of mistakes, not having the right team of people on the project was the biggest. He recommends paying for the right people, even if they cost a bit more, because they can make the difference between a profit or a loss.

Scrutinise your budget and plans

If you work with a development financier or peer-to-peer lender, they will probably have their own quantity surveyor who will check your plan and figures and decide whether the project is viable, or whether you’re just being overly optimistic!

If you want further reassurance, Rob suggests paying for an independent surveyor. The cost of a mistake or something priced incorrectly, could be more than covered by their fee.

Rob’s main advice is to have your numbers checked right at the beginning and invite criticism and challenges to your plans, ideas and timeframes. Even if their responses may be disheartening, you should encourage them and investigate their validity. It will be a lot cheaper to investigate it before you get started than doing it later on.

Build a quality team

For those just starting out in development, Rob recommends forming a team that has a good estimator, quantity surveyor and someone good at procurement.

Their own projects these days are significantly larger and their team is now made up of a construction director, senior quantity surveyor, procurement/estimator, site manager and a land buyer. He says the size of team they currently have is probably overkill for what they need, but reflects where they want to be going and prepares them for bigger projects. As he says, the cost of getting it wrong can be so big that he considers the investment to be totally worthwhile.

www.matthewglloyd.co.uk

Be clear on your outcome

Understanding what you want your outcome to be will help you make better decisions at the outset. With so many decisions that will need to be made, knowing what you want from your development will help make that process a lot easier. It will also help you judge at the end whether the project has been a success or not.

Don’t go too crazy with your first development!

Rob says that you will learn the most from your first development; what you like and dislike about being a developer, what projects you might be willing to undertake, whether you have the right team, the right business angle, the right model, whether you’re going after the right markets, etc.

“All those things you can have the answers in theory, but by being a practitioner, by actually doing it on whatever scale will help inform you and then guide you to make better choices moving on from there.”

www.matthewglloyd.co.uk

Find out more

Visit the website of Property Hub

Follow Property Hub on Twitter

Follow Rob Bence on Twitter

Transcript

Download a transcript of the interview with Rob Bence.

Please connect with me

Subscribe, rate and review the podcast in iTunes

Rate and review the podcast on Stitcher

Like our Facebook page

Follow us on Twitter

June 4, 2019
HPH194 : What are the hidden costs of building a house? – with Paul Testa
Paul Testa from Paul Testa Architecture talks about how to predict the costs of a house build and shares his tips on limiting a self-build budget.

Interview with Paul Testa

Architect Paul Testa’s interest in construction led to coordinating and teaching the technology course for the MArch in Architecture at Sheffield University. He’s also a tutor and lecturer for the Sustainable Architectural Studies Masters course at Sheffield University. He is a member of AECB (Association for Environment Conscious Building).

Build cost is not necessarily ‘cost per square metre’

Paul aims to help clients gain realistic expectations of their project’s costs. They start by assuming a mid-range, bespoke new-build would cost roughly £1500 a square metre. They then use their cost calculator to add in additional costs, taking into account factors like slope of the site, higher specification and external works.

To price the whole project, Paul says self-builders should include connecting utilities, landscaping, and contingency in the overall build cost. If an architect or builder prices your project at £1500 a square metre, remember this may not include all the costs of the build.

A steeply sloping site

Fees are affected by more than just project size

It is important to have accurate cost predictions for your build and these do not just relate to square metres. Paul explains that the cost of consultants isn’t tied to the size so much as the complexity of the project.

Some costs, such as surveys, might depend on both the size and the complexity of the project. Paul recommends adding 30% to your construction cost for planning and building regulations fees and any other costs. Some of these don’t change with the size of the build, so the fee will be a greater percentage of the build cost for a smaller project.

Utility costs can vary from site to site

Paul has found the cost of connecting gas to be quite consistent, but not so for the electricity supply. The cost can vary hugely depending on the work involved in making your connection, and remains unknown until the application is made. Furthermore, Paul warns that there is no room for negotiation, saying, “It’s a captive market unfortunately.”

“Most contractors won’t have sufficient insurance for the whole project”

Contractors will have insurance to cover their liabilities (public liability and employer’s liability insurance) and potentially for their equipment on site. The architect also needs professional indemnity insurance and public liability insurance to cover the implications of design decisions. Paul advises clients to procure insurance to cover the new building and materials.

Claiming back VAT may depend on your contractor

Some contractors don’t pass on the cost of VAT: the client never sees that cost and the contractor just claims it as part of their quarterly VAT payments. This may be beneficial for clients who don’t have the cash flow to pay upfront for the build plus VAT and then reclaim the VAT later.

Often clients prefer to procure large single ticket items (e.g. windows) themselves, to avoid the contractor’s overheads and profit. In that case, Paul reminds clients they should budget to cover that VAT cost until the end of the project.

Keep back at least 5% of your budget as contingency

To deal with unknowns such as the ground and weather, Paul recommends having “something there to cover you, a minimum of 5% but more generously 10%”.

He warns that stretching both construction budget and contingency “can be quite dangerous.” He advises spending more at the end if you have money left, rather than pushing to do absolutely everything without compromise.

Expert advice during planning helps predict cost more accurately

Although he cannot completely mitigate the risks of unknown costs, Paul ensures that the correct investigations are done as early as possible to try and minimise additional costs. “Certainly on the bigger jobs where there is more scope for value engineering,” he says, “we will try and bring a quantity surveyor or an estimator in at roughly the planning stage.”

This expert can give a budget cost for the build. If it doesn’t fit within a client’s budget, Paul’s team can make changes before the planning application is submitted, avoiding later amendments and resubmissions.

Avoiding the tender process can actually save money

Ideally, Paul likes to find a contractor he wants to work with and that the client is happy with, who will “buy into” achieving the building at the budgeted price. He relies on the expertise of the chosen contractor to ensure that the detailed design matches that budget.

Although Paul acknowledges the benefits and drawbacks of both routes, he doesn’t believe the tender process is the best way of procuring a building, saying “We actually incentivise that in our fees and we charge less for a negotiated price with a contractor than we would do for dealing with a full tender process.”

Contractor availability can be as important as cost

Paul works with a pool of preferred builders, although this can change over time. He explains that the best contractors can be booked up to two years in advance. Although clients might be disappointed by delays, they usually come round. “If they want the very best product, they want the very best people to do that,” he says.

Engaging the contractor earlier in the process can mean that delays are avoided. Having agreed an approximate start date with a contractor, Paul stays in touch while developing drawings, maintaining agreement on budget and timescales. He says, “By the time we’re ready and the contractor’s ready, everything’s drawing together.” However, he adds, “it doesn’t always work that perfectly.”

Tender processes have their own drawbacks. A four to six week process can lead on to reviewing prices, interviews, and value engineering. After all this, the contractor’s availability might be delayed another year. It can be difficult for a client to ignore a much cheaper quote but Paul warns, “Normally, if it’s too good to be true, it probably is.” The project ends up costing as much but with extra difficulties.

A passive house can be built for less than £50,000!

In 2013 Paul’s team submitted a design to the National Self-Build and Custom Build Association’s annual competition ‘Self-build on a Shoestring’. The brief asked for a detached family home, on a very simple flat plot, for £50,000 or less, including all materials and specialist labour but assuming utility connections were already in place.

Paul’s approach was to make “a simple construction that can be built by the average self-builder”. While mainly a “materials only” cost, it included specialist input such as commissioning the MVHR system, certifying the electrics, gas installation and digger and scaffolding hire.

Not only did their design offer a 70m² family home for around £45,000, it was also designed using the passive house planning package. Paul says, “We delivered a building that achieved passive house for less than £50,000 and would be a compact but very comfortable single family home.”

Delivering build elements constructed off-site to manage costs and time on a steep site

Five top tips to keep build costs to £50,000
- Remove main contractor: get hands on, do physical work, and do your own project management
- Reduce risk by choosing a manageable construction method, such as a simple softwood timber frame.
- Minimise the number of materials.
- Maximise the function of each element, e.g. exploit oriented strand board (OSB) in three ways: as an airtight layer, internal wall linings and structurally, to stop the building twisting.
- Choose larger format materials with cheaper production and installation costs, such as fibre cement slates rather than timber cladding.
Find out more

Visit the website of Paul Testa

Follow Paul Testa on Twitter

Follow Paul Testa on Facebook

Visit the website of AECB (Association for Environment Conscious Building)

Transcript

Download a transcript of the interview with Paul Testa

Please connect with me
- Subscribe, rate and review the podcast in iTunes
- Rate and review the podcast on Stitcher
- Like our Facebook page
- Follow us on Twitter
October 13, 2017
HPH184 : Balancing a self build with work and family life – with Donal O’Leary
Donal O’Leary tells us about his self-build in Ireland and shares advice for a successful project.

Interview with Donal O’Leary

We catch up with Donal O’Leary, the first House Planning Help Hub member to complete a self-build project! The decision to self-build came about by accident, as Donal and his wife were originally looking for a run-down property to renovate or rebuild. The properties they viewed didn’t quite meet their needs or budget, and suddenly the right site came along.

An unorthodox approach helped them secure their plot

Donal explains, “We didn’t really need the full site as it was. It was actually too big and therefore it was outside of our price range.” After making enquiries and seeking legal advice, they came to an agreement with a neighbouring landowner to join forces and put in a high enough offer to outbid another interested party. The site would then be split into two, for their own developments.

It took a year of planning before construction started

After acquiring and sorting out the site, the second year was the planning phase, split into obtaining formal planning permission and working with architects and quantity surveyors.

In Ireland, you have a pre-planning meeting with the local authority. This is an opportunity to run through plans and get approval to apply for formal planning permission (or find out what needs to be done differently). Donal explains you don’t have to have final drawings, but you do need to provide plans showing where the house will sit, access, and services like sewage and water.

Cost dictated the final design of the house

The site was large enough to accommodate a big house. But for Donal and family, the priority was a comfortable, clean and healthy home that would take advantage of the light and aspect, as well as modern insulation and air-tightness standards. Cost ultimately decided the final design, and the overall size was dictated by that design and how the spaces were arranged.

The budget was based on some funds left over from the sale of their previous property, plus the mortgage amount they would be able to secure. Donal adds, “The rainy-day fund and the piggy bank were all broken at this stage. So, we worked out roughly what we could afford…and worked back from that primarily.”

The planning phase included very detailed specifications

Their architect and quantity surveyor filled in most of the tender document template, detailing the build specifications. Donal and his wife provided additional information (such as doorknobs, stove handles, bathroom finishes) to complete the document.

It took five or six iterations of 20-30 page documents to figure out exactly what was needed. Donal says in hindsight it was definitely worth it, but at the time it was difficult. “You’re at the stage where you can’t even visualise what the house looks like, and you’re expected to say, ‘well, I want a Belfast sink with a tap that goes a certain way’.”

Time-wise, their biggest challenge was appointing a builder

Christmas time was the deadline for receiving responses to their tender. Donal says, “I’m sure the builders were delighted to be filling out a huge tender document on Christmas Eve!” They narrowed it down from four builders to two, met both and then picked one. Availability was a very important factor, as well as previous experience and price. The tender process took a couple of months and the actual build lasted just over 12 months from start to finish.

A precise calculation helped them stick to their budget

The quantity surveyor broke the build down to a very detailed level, so they knew exactly how much it would cost. Donal says they were reasonable estimates with a bit of wriggle room to alter the spec if needed, when it came to actually buying fixtures and fittings.

There were only a few minor changes during the build stage. Donal attributes this to the time spent upfront with their architect and quantity surveyor on the spec. It gave them a baseline to go back to, which helped them manage their finances. And they had monthly budget reviews with the builder.

They tried to attend site as often as possible

The building contractor was effectively the project manager. So for Donal, the biggest challenge was not a technical one, it was just keeping on top of everything and being available. He admits it’s difficult when you have to take calls and send emails while at work, but says you just have to find a way.

Donal advises others to take any chance they get – before or after work, or at lunchtime if you’re nearby – to go to site and give an opinion so things can move on. His wife spent any spare time during the day onsite, involved in the daily decision-making. Donal recalls a few times where just being there averted a disaster, explaining, “So, if we weren’t there, they would’ve done x, but because we were there, they did y.”

Keeping their architect engaged in the entire build process was worthwhile

Laws have changed in Ireland and you have to have an Assigned Certifier; an engineer or architect signs off the various certification and documentation across each phase of the build and can be held accountable by the local authority.

Donal and his wife chose to involve their architect (who they found through word of mouth) for the whole project. So she had a vested interest not just from a design perspective, but also legally and financially. As the client, they had the reassurance of a professional overseeing the builder.

They leaned on their architect quite a lot. As Donal explains, “It’s not just somebody who draws nice designs, prints them off and you go, ‘move a wall here, move a wall there.’ It’s far more than that. It’s a design eye, it’s finishing, it’s the construction knowledge that the average client doesn’t have.” She was a good sounding board when they had to make decisions, offering suggestions and steering them in the right direction.

Sustainability had to be balanced with budget

There were times where a sustainable option wasn’t the most economical or expedient, for example they considered rainwater harvesting but the cost involved would have pushed the build over budget.

However, they tried to reduce the carbon footprint of their new build where possible:
- Orienting the house for solar gain, with canopy-style shading to reduce overheating.
- Avoiding the need for oil due to high-spec insulation.
- Using an air source heat pump.
- Leaving some of the garden as a nature area for wildlife, planting some clover there instead of grass so as to have a low maintenance meadow.
Transcript

Download a transcript of the interview with Donal O’Leary

How stupid is our obsession with lawns?

If you’re planning a vast lawn for your new house, is it actually the most sustainable thing to do?

Donal recommends listening to a Freakonomics episode which ponders how natural lawns are and looks at alternatives.

And if you enjoy that, check out last year’s interview with Lisa Kerslake on creating a biodiverse garden.

Please connect with me
- Subscribe, rate and review the podcast in iTunes
- Rate and review the podcast on Stitcher
- Like our Facebook page
- Follow us on Twitter
July 14, 2017
HPH140 : What is a quantity surveyor? – with Jerry Thomas of Smith Thomas Consult
Jerry Thomas explains what a quantity surveyor does, and when you might need to use one on your project.

Interview with Jerry Thomas

Jerry Thomas is company director of Smith Thomas Consult, a cost consultancy practice established in 1987. He qualified with a degree in quantity surveying but explains that other people might come into the discipline from more general backgrounds and then specialise as they go through their career. A quantity surveyor (QS), either as an individual or as a practice, will be a Member of the Royal Institute of Chartered Surveyors, and carry out 20 hours per year of Continuing Professional Development to ensure that they are maintaining their professional standards.

A QS can assist with many stages throughout a self build, including: initial budget cost estimates, working up tender packages, help with costings, assistance with funding options and bank appraisals, tender evaluation, value engineering, monthly evaluations to ensure the contractor is paid regularly, and making sure that necessary paperwork is in place and the final account is agreed.

Don’t leave it too late to appoint a QS!

Jerry explains that often people won’t think to appoint a QS until they’ve already had their grand plans drawn up by their architect, by which time his role becomes more about providing a sanity check on costs. Appointing a QS at an earlier stage to provide an indication of budget per square metre based on the type and specification of property they are looking to build, can keep the project attainable. Otherwise they’ll have to go through the painful process of diminishing the designs, reducing the specification and aspirations, and stomach additional costs associated with reworking those designs.

Ideally Jerry would be appointed when there is a simple, sketch design that shows: floor plan, typical elevation, roof type and pitch, fenestration levels, construction type and cladding material. From this Jerry would work out a base cost figure of £X per square metre, and use this as a starting point with subsequent variations to e.g. window types, heating system, roof covering choices etc, adding or subtracting from that base cost, to give a reasonably good idea of what the eventual cost is likely to be.

The level of involvement that you need a QS for will vary according to the scale of your project

Jerry would always recommend appointing a QS for a building project, but the level of involvement required wouldn’t always be the same. For a £20,000-£50,000 extension for example, 2-3 hours work (costing around £250) would provide a quick sanity check giving a very high level order of magnitude that what has been proposed is feasible. For building a multi-million pound house you’d be more likely to need a full suite of services ranging from initial budget advice right the way through to the final accounts stage.

A QS will use experience and a wide variety of resources to work out costs

Quantity surveyors pay for access to the Royal Institute of Chartered Surveyors (RICS) nationwide database of costs, the Building Cost Information Service (BCIS). It provides average costs by building type, inflation indices, build cost indices and tender price indices. They would use this as a high level check towards the initial cost estimate.

They will then use in-house projects as a benchmark to show how similar projects have compared, and with the differences that the architect and client are proposing, what impact they would make to the costs.

Annual cost books list the costs of every major component that’s needed in a building, eg cost per square metre for brickwork, stonework, timber etc.

And then you will be relying on their general experience. A good QS will be keeping an eye on market trends and the building press to keep up to date and even ahead of the cost books.

Online calculating tools may not capture everything needed to provide a full project cost

Jerry wouldn’t recommend that a self-builder rely on online cost calculating tools to work out accurate costings. While he can see they have a value on very small projects, he emphasises that there is a huge danger that you could miss out on many of the peripherals that go to build up a full project cost. Rather than just looking purely at the building costs, you need to consider the many factors associated with drainage connections and connections of services for example.

A QS can help the client get the best value from the tender stage

For a self build, Jerry would always recommend going down a traditional route of procuring work which has a bill of quantities and specification clearly set out. An alternative would be to issue a contractor with a set of drawings and performance requirement for the specification, and allow them to come back with a proposal. This runs the risk of a contractor submitting a low tender price in order to get the foot in the door, who then might be trying to recoup those costs throughout the build, either by cutting corners or saying that some items hadn’t been included so will cost extra.

The skill of a QS lies in ensuring there is sufficient documentation to rigourously check the tenders, comparing like for like, and understanding what might be causing variations in pricing, to establish what is actually going to be best value for the client.

“So whether with a schedule of works or a bill of quantities we can actually do that analysis at tender stage which prevents problems maybe post-contract when the works are on site with a contractor who is trying to recover a bad position.”

Always have a contract in place with your contractor

You should always have something in place before the commencement of the work, even if it’s a letter forming the rudimentary basis of a contract which just confirms the start and finish dates. Ideally it would also include what the sum is that you’re paying, and that the sum is based on which named architectural drawings and specification. The Joint Contracts Tribunal (JCT) have a range of contracts available for this purpose.

Planning, planning, planning!

Jerry’s final tips are to ensure that all the designs are finalised, costs sorted, and tenders agreed with the contractor and incoming services have been arranged before work commences.

Ensuring that you have a full, considered, joined-up package of information, cost, programme and contract before you start, even if that means deferring the project for 6 months while you get everything together, will mean that you are less likely to have unexpected variations, problems and costs later on.

Transcript

Download a transcript of the interview with Jerry Thomas

Find out more

Visit the website of Smith Thomas Consult

The Hub update

Our latest update sees Ben return to Long Barrow Passivhaus, having a chat to Alex Baines and a look around the building. Some things have changed – one window has increased height size which they were able to almost take out a layer of the ICF to make the space for.

Our latest module in The Hub is on “Building your team”. Who do you need to hire? Everyone always says they want to be involved from the beginning of the project, so how is that even possible? We look at the different individual roles and how you might bring a team together.

For more details of how to become a member, check out Houseplanninghelp.com/join.

Please connect with me
- Subscribe, rate and review the podcast in iTunes
- Rate and review the podcast on Stitcher
- Like our Facebook page
- Follow us on Twitter
August 3, 2016
HPH115 : How to budget for a house build – with Mark Brinkley
Mark Brinkley, author of the Housebuilder’s Bible, talks about his new self build project and shares his experience of putting a budget together.

Interview with Mark Brinkley

Mark Brinkley is a freelance writer and author of the Housebuilder’s Bible – a number one bestseller on Amazon. We first spoke to Mark back in 2013 about how self build in the UK compares to Germany. With another project currently underway, we’re talking to Mark again, this time about how to put a budget together, and how to stick to it.

Urban building plots can be hard to find

Mark has purchased a plot in a conservation area of Cambridge, albeit he points out, not the posh part of the city! It is an old warehouse in a street of Victorian houses, and as such a bit of an anomaly. It is fairly impractical as a warehouse and not in a good location to be a commercial property so Mark doesn’t foresee there being too many planning issues with building a house there instead.

Current warehouse on the plot

Up against around 50 other bidders he was successful with his speculative bid of approximately 20% over the asking price, and Mark comments that any potential development profit from the project has gone to the landowner!

Logistically it’s a challenging site, being on a one-way street that’s a bit of a rat-run, and with no side access. There are going to be traffic, loading, craning and storage issues to contend with.

Current street scene

Proposed new dwelling

The process is terrifying!

Despite Mark’s 20 years of writing about how to build houses, he finds the process of actually going through the self build process again terrifying! The process is so different from when you buy an existing house, particularly a new build, where the only considerations might be choosing paint colours and tiles. He explains that: “You’ve got to invest yourself in it, you’ve got to immerse yourself in it.” And even with the best knowledge bank in the world you still can’t really determine how much it’s all going to cost, because it’s so driven by market conditions.

It’s a cash buyer’s market

Mark knew how much money he and his partner had available to put into the project, with a contingency factored in from the outset. Both being over 60 they were keen to build mortgage free if possible. His partner had sold her house, with the money sitting in income bonds which could be accessed quickly.

The landowner insisted that completion take place within the unusually short time of just 10 days. Money that Mark had from a previous house sale a few years earlier had been sitting in bonds and shares, so Mark spent the 10 days making the cash available in order to meet the deadline. For a self build in an area that has a competitive property market, being a cash buyer and not having to borrow to raise funds is a huge advantage.

Use basic cost tables as a starting point

By looking at various property websites you can ascertain what a finished house in that street is likely to sell for, and use that to work back from its finished value – i.e. estimate roughly what it will cost to build and roughly what you’d spend on the plot.

“So in a way, right from the outset, you don’t think of it as a developer. You think of it as this is what we need to secure this plot and then we figure out how much we can build a house, how big a house we can build, what we can build with our budget. So it’s sort of almost back to front really. It’s not the classic developer’s calculation that everything drives the plot price down.”

As a starting point, Mark suggests looking at the basic cost tables that you can find from RICS and in property magazines, although he is finding that these are actually at the low end of expectations as his costs so far have been coming back far higher than expected. And even within a cost per m² price bracket, Mark points out the range in the sizes of buildings produced can be vast.

Mark recommends using the cost tables to get to the planning application stage, thinking simply in terms of does it fulfil the criteria of what’s wanted, does it look elegant, will it be energy efficient, and will the neighbours accept it. After that stage he suggests turning to an itemised spreadsheet, filling it out in more detail and building up the budget. Mark himself is currently at this point and is only now starting to think about the build method and the construction materials that are going to be used.

A half built house is probably worth less than an empty plot!

The work needs to be broken down logically into packages of what work needs doing, in what order and how much it’s going to cost.

Once the prices start coming back, if they turn out to be beyond your means, or you have lost heart, then you still have the option to sell the plot with planning permission on it. What you don’t want to do is start building and then try and sell half way through.

You can control the cost outcome of elective extras

While there are some elements of the build where you have limited control over costs – such as demolition, groundworks, and building the structure of the house – there are ‘elective extras’ where you can actually have control of the cost outcome. Mark uses the example of a kitchen, whereby the functionality is the same whether you spend £3,000 or £30,000, but you do actually have quite a lot of control over the amount you choose to spend.

While some constraints might be imposed, either by the site itself or by planners determining material choice, other elective extras might give you self-imposed constraints. An example of this might be in wanting to build to the Passivhaus standard there might be additional costs for joinery, triple glazed windows etc.

Build to the neighbourhood

With so few urban sites available, sometimes it might be necessary to just build to what’s there already. If you were to come across a house on a very expensive street, you might find that building a house of 120m² would leave you spending way over the odds on the site, when in fact the site might be demanding a house of 200m²+. In this example of only wanting to build a small house, spending so much money for the plot would be pouring money down the drain because the development criteria suggests you should be building something in keeping with the neighbours.

And vice versa, if you want to build a 250m² house that’s going to be worth £1,000,000, then you’re unlikely to achieve that on a plot in a street of £300,000 houses.

Budget for the entire project, not just the house

The first rule of sticking to a budget, is making sure you make a budget in the first place! And always factor in a contingency, probably of 10% or more.

Always ensure you include items which might not immediately seem obvious to include as they’re not necessarily part of the house itself. Don’t ignore fencing, outbuildings, garages, paving etc. In Mark’s case, his plot doesn’t have rear access so they will need to start by building a shed in the back garden (which can be used as a site hut too).

Also be careful if you’re working off cost tables, as the price per square metre doesn’t include gardens, garages, outbuildings and other things. The square metre rate also doesn’t take into account development costs, such as installing services, running drains, fencing paving etc. In order to make a back garden plot serviceable you may need to spend £30,000 or more. This would be a development cost, and not a build cost.

Try to gather costs from whatever sources you can, be they magazines, books, internet etc. Mark also recommends using a quantity surveyor. As he puts it: “Every pound spent at the beginning saves £5 at the end!”

Keep on top of the spreadsheets, so you know right from the outset if you’re going over budget, instead of leaving it too late and running out of money before you can finish.

“I wish there was a short, pithy way of saying it, but it’s actually a lot of detailed accounts work that goes into a) making the budget in the first place, and b) sticking to it.”

Find out more

Follow Mark Brinkley on Twitter

Read Mark’s blog

Transcript

Download a transcript of the interview with Mark Brinkley.

House Planning Help at Ecobuild

We’re going to be having a House Planning Help meet-up at Ecobuild this year, on Tuesday 8th March. Alex Baines, who we’re featuring in The Hub, will also be there and answering your questions and telling us how progress on his Long Barrow project is going. If you’re going to be heading to Ecobuild, we’d love you to come and say hello!

Please connect with me
- Subscribe, rate and review the podcast in iTunes
- Rate and review the podcast on Stitcher
- Like our Facebook page
- Follow us on Twitter
February 8, 2016
HPH037 : Overcoming the Challenges of Self Build – with Jason Orme from Homebuilding & Renovating
Jason Orme, editor of Homebuilding & Renovating, shares some of the key challenges that self-builders face and what can be done to make sure they don’t become pitfalls. He also explains how custom build might be a good option to explore for those who want a bespoke home but without the same level of risk.

Interview with Jason Orme

Jason Orme was keen to become a journalist and so he applied for a job at Homebuilding & Renovating magazine. It was only after landing the role that he really began to increase his knowledge, and this eventually led to him buying a plot in 2004 and building a house. Now he has seen and written about hundreds if not thousands of projects and in his own words he is ‘a little bit obsessed by it.’

Finance and Plot Availability Prohibit Most People From Self Building

Jason says that since the recession of 2008 getting access to finance has become much harder. He does, however, believe that as the economy improves more and more mortgages will become available again.

By far the biggest problem is the availability of plots and therefore price of plots. The two are very closely linked. It’s not difficult to find a plot if you’ve got lots of cash!

Jason’s own self build

Even Great Architects Are Not Necessarily Good With Budgets

It is not uncommon that projects go over budget. If a project starts to go over budget on the first day then this is likely to be a sign of things to come. In Jason’s experience architects are great at designing houses but they are not so good at marrying up the budget to the design. People often have plans for large, complicated houses with lots of kit and a budget that is completely unrealistic.

A Quantity Surveyor Can Provide an Independent Assessment of the Project’s Cost

By running most things through a quantity surveyor, or QS, there is the opportunity to check the finances. A QS is an independent expert who will effectively do a full materials and labour schedule of your build from the plans the architect has produced. This means any potential problems are discovered in the planning stages rather than during the build.

Once ‘Out of the Ground’ Build Costs Should be Predictable

Jason recently met someone who had gone 50% over budget on a nearly £2 million build! So it can happen at all budget levels, big or small. There are certain elements that are difficult to budget for, such as the foundations, because you may not know the full story until you start, but Jason stresses that ‘above ground’ is manageable and quantifiable in most instances.

There’s Definitely a Sweet Spot When it Comes to House Size

The average floor area of a self-build house that Homebuilding & Renovating might feature is around 200m². This compares to a typical new estate house (in the UK) that might be 80m² or 90m². So the self-builders that Jason meets tend to build bigger houses. At the upper end of that scale he once saw a house that was 2000m²!

However Jason suggests that if a house is too cramped there can be averse affects: “David Snell, who continues to write for the magazine, always says that one of the great reasons for the breakdown in society is because houses are too small. So growing families, particularly when you’ve got teenage kids, they need their own space and it’s preferential if they’re in their own big bedroom with a bit of a guest suite rather than on the streets. My view is the same. I think homes should grow with families and be flexible enough to do that.”

Custom Build Should Take a Lot of the Risk Out of Self Building

Custom build is a subset of self-build and it aims to allow bespoke homes to be constructed but with the minimum of risk. It’s revitalising an old concept whereby a large area of land is divided into serviced plots and the planning for the whole site (rather than on an individual basis) is done upfront to speed up the process. Fixed priced build costs also enable people to be very clear of what they are letting themselves in for.

Graven Hill near Bicester in Oxfordshire is the UK’s largest scheme to date. Almere in Holland is often cited as one of the world’s most significant schemes.

Self-builders Tend to Have an Entrepreneurial Spirit

While lots of people desire to build a house (typically between 10-30% of the UK population of 63 million) when it comes down to the practicalities of finding land and so on, the figures drop off significantly. Currently there are 11,300 new self-builds per year in the UK.

Having met lots of self-builders, Jason believes that one trait they all have in common is an entrepreneurial spirit. Even if they come from different walks of life, they tend to be independent and have a strong desire to create something specifically for them rather than settling for any old house.

In Australia ‘Package’ Builds Make Life Easy

Jason likens the house building process in Australia to buying a new car: “You’ve got the basic package, you’ve got the optional extras, all of which is guaranteed in terms of price and scheduled delivery as well.”

Interestingly Australia deliver far more custom build homes (Jason says somewhere between 50,000 and 100,000 per year) than the UK despite having a smaller population of 23 million!

The UK’s Housing Market Will Continue to be Focussed on Second-Hand Stock

Even if custom build took off in the UK and 30,000 or 40,000 new houses were created each year, it would still be a small part of the market. This is because there are currently around 23 million houses in the UK, so the chances are that most people will be buying a second-hand house rather than a new custom build house.

Avoid the Eco Bling!

Certain products and materials have a lot of hype attached to them, and Jason says that people are often willing to throw a lot of money at gadgets thus making a slightly naïve specification.

Solar panel and heat pumps all have a place but often the money is far better being spent in the fabric of the building. Minimising energy use and the heat demand in the house is by far the smartest thing that people will do, particularly for those who are not on mains.

Invest in Expertise When it Comes to the Planning Process (UK)

Relying on an architect or design professional to guide you through the planning process could be a mistake. While architects may know a little about planning, their primary skill is design and so they are unlikely to be able to keep up with those minuscule changes to planning policy which happen frequently.

Finding a good planning consultant is an absolutely critical way of unlocking the potential of some sites.

Villages Often Lack Affordable Housing for Young Families

The UK has a unique situation in that it has a lack of land but also a cultural message to protect the countryside and preserve it as a museum.

Jason believes that the countryside is dying – with pubs, schools and other amenities constantly closing down – because there are no new houses to help young families live there. Yet development continues to be fought against.

Jason says: “I think we have to accept that if we want our children to live in these villages and towns then we have to allow house building in certain areas and better for it to be high quality of individual design ideally than for it to be the kind of housing stock that we’ve seen go up over the years.”

We Must Provide the Infrastructure for the Growing Population

Jason tells the story of how he was looking at an atlas with his 3-year-old son and the first page was about the world’s population. In the space of 100 years the population has jumped from around 1 billion to 6 billion.

When Ben challenges Jason as to whether new houses just encourage further population growth, Jason responds: “The fact is that people seem to want to come to want to come to the UK and people seem to want to have children, and I don’t think you can necessarily stop either of those. So to an extent you’ve got to face the fact that you need to create housing for them otherwise where are they going to live.”

Multigenerational Homes Could be an Option for the Future?

With affordable housing clearly a worldwide issue, one change could be a move towards multi-generational households where three generations of a family live under one roof.

A Smart Approach is Needed to Housing Development

The UK government have a figure of 250,000 for the number of new homes that are needed each year to cope with demand.

Jason believes that this hasn’t been achieved once since the 1960s and is unlikely to be met in the coming years. Jason also thinks that certain areas of the South East and the Midlands are approaching capacity and that it would make a lot more sense to spread the load around other parts of the UK where housing densities are comparatively low.

[The Internet is also making it easier to be very much in the heart of the business economy without being physically there!]

Homebuilding & Renovating Aims to Provide Independent Advice

The team at Homebuilding & Renovating have all been through the process of building their own houses and as such all their advice comes from experience. Newcomers to the world of self building will also find that there are lots of people who are trying to sell their products or services! Homebuilding & Renovating aims to provide independent advice, help you increase your knowledge and guide you through that jungle!

Winner of the Self Build Awards 2011. Copyright homebuilding.co.uk

It May Look Like Drama on TV, But it Doesn’t Have to be in Reality

While television programmes like Grand Designs inspire people to take on their own projects, they also create drama where there need not be drama. A few projects go over budget and over schedule but there are thousands that happen each year that don’t.

Jason concludes: “If you can get experts involved and listen to people, then generally it’s a lot easier than you might think . . . It’s a massively rewarding experience, life-changing really. It certainly was for us.”

A unique urban home. Copyright homebuilding.co.uk

Transcript

Download a transcript of the interview with Jason Orme.

Our Question for the Comments Section

What’s been the biggest challenge of your project so far? And how have you overcome it?

Want to Create Valuable Content in 2014?

As TV and radio continue to lose impact, more and more people are getting content delivered to their mobiles, tablet and desktop computers via the Internet. Any individual or company can create this content, it’s just a question of how you want to do it. Can Regen Media help you create content in 2014?

Please Connect With Me
- Subscribe, rate and review the podcast in iTunes
- Rate and review the podcast on Stitcher
- Like our Facebook page
- Follow us on Twitter
December 4, 2013