Advice on Finance

Finance

Getting hold of the financing to undertake a self-build project is something within the reach of anyone who can afford to buy a home. Start with your regular lender or bank — most will have lent money on self-build projects before and will be able to tell you how much you can borrow (based on the usual income multiples). Money tends to be released in stages either before commencement of work or in arrears. Specialist ‘advance’ mortgages can be arranged through BuildStore (for details on its Accelerator scheme visit buildstore.co.uk) or Advanced Flexible Self-build Mortgage (afsbm.co.uk). As a last resort, consider a commercial arrange­ment, which would usually allow you to borrow higher sums at a significantly higher level of interest.

Warranties

Most new homes built in the UK have a 10-year warranty to cover structural defects and provide funds for any necessary remedial work. It is not legally necessary but a 10-year warranty is strongly advised — and is effectively a requirement should you wish to sell the house within 10 years of completion. Warranty providers will inspect the project at set stages during construction and provide a completion certificate at the end of the project. Some providers enable the warranty inspection to double up as a Building Regulations stage inspection.

NHBC is the leading warranty provider, covering 85% of new homes built in the UK. It has a Building Control service which inspects some 50% of new homes for compliance with the Building Regulations.

Its Solo for Self-build policy covers the self-build process before and after completion. Cover also includes the cost of alternative accommodation for the residents of the property during repairs, costs associated with any necessary repairs such as preparation of the remedial scheme, removal of debris and ensuring any remedial scheme meets the Building Regulations.

As well as major damage, Zurich’s Building Guarantee covers the cost of alternative accommodation during repairs, professional fees for the design of repairs, debris removal and the cost of meeting any additional regulations. New builds and conversions are considered and premiums set in relation to each individual project.

Self Build Zone and Project Builder (via its Premier Guarantee brand) offer 10-year technical defects warranty cover for new builds during and after the project (also available for conversions with Self Build Zone). Premiums start at around £980 for a £100,000 self-build.

If you fail to take out a warranty during construction but retrospectively decide that you need cover, Self Build Zone or Project Builder should be able to help.

Site Insurance

Site insurance needs to be in place from the minute you purchase your plot. This will provide cover against injury to tres­passers, injury or death to others resulting from con­struc­tion, theft of plant or mate­rials and damage to the property. Cover can also be arranged for caravans on site, hired plant and works to the highways.

There are essentially three types of cover pro­vid­ed by a standard policy:

• Public Liability Insurance
• Employer’s Liability Insurance
• Contract Works Insurance

Premiums are usually fixed for both Public and Employer’s Liability, but vary with Contract Works in relation to the anticipated total rebuild cost of the property. As a guide, though, you should expect to pay in the region of between £500-1,000 for a policy to include all three types of cover. Contractors will have their own insurance but do not rely on this as it will not cover all your needs, especially if you are using more than one contractor.

The 30 Minute Guide to Self-Build:

• Advice for the First-Time Self-Builder
• Advice on Finding a Plot
• Advice on Labour
• Advice on Projects
• Advice on Planning
• Advice on House Design

Further reading:

• The Secrets of Building to a Budget
• A Guide To Reclaiming VAT on Self-builds
• How to Cut Costs Without Sacrificing Quality
• Building Contracts: When Things Go Wrong

Further contacts:

• Aon - Specialist Home Insurance