The Costs of Plots

You’ve found the plot. The long search is at an end and now you can sit back and relax. After all, the next stages and the next big payouts will be when the builders eventually start work…

Dream on. Now is when things really start to kick off. You’ve got to talk to the planners. You’ve also got to think about design — and decide upon the architect or designer you’re going to use, or whether you’re going to pay for a package deal. You may have a lot of things going on in your head but now comes the time when you’ve got to translate those ideas to the plot itself.

Most importantly, you’ve got to start paying out from this moment onwards. You need not only to have budgeted for this eventuality but realised that a lot of this money has to be paid out or committed long before any mortgage finance kicks in. So it’s coming out of your pocket at this point, even though you may eventually be reimbursed by the loan finance.

If one assumes a land purchase cost of £250,000 with an on-site build cost of around £200,000, then the upfront and infrastructure costs will pan out something like the example costs outlined in detail below…

The Costs

(1) - Estate agents: Strictly speaking, you won’t have to pay estate agent’s fees on the purchase of the land because those costs will be defrayed by the vendor. But you will have to pay out on the sale of your old home.

(2) - Solicitors: Most of the fees will be paid on legal completion but search fees will have to be paid upfront.

(3) - Lender's fees: Many building societies now require a non-refundable booking fee, payable upfront together with a nonrefundable valuation/survey fee. Those going through a mortgage broker will also have to pay the broker’s non-refundable fee.

(4) - Site surveys: It is advisable to get a site survey to establish the true physical boundaries of the plot. If, when this comes back, there appear to be discrepancies between what’s actually on site and the plans of the land, further investigation and costs may accrue with solicitors and the Land Registry in order to sort the problem out. If there is an adverse possession, a single premium indemnity policy may be necessary at an average cost of £200. Most times this is paid for by the vendor, but not always.

(5) - Engineer's fees: If bad ground is expected a soil investigation may be necessary. If poor ground is confirmed an engineer will have to design the foundations.

(6) - Design fees: An architect may well work on a percentage basis for the design, which will include the initial design and the obtaining of planning permission and Building Regulations. An ASBA (Association of Selfbuild Architects) architect is likely to charge around 3.5% for this service but there may be additional charges if they are required to deal with the tendering process and/or inspect the building as it progresses. Designers may well be cheaper and will vary from anything between £500 (for a pretty basic job) up to around £5,000. Package deal companies will require a fee of anywhere between £800 and £1,500 upfront for the initial design study. The costs of the subsequent drawing office work will then be absorbed within the package deal.

(7) - Insurance: Public Liability will be required from the moment of ownership. Self-build policies normally roll Public and Employer’s Liability together with Contractors All Risk into one package.

(8) - Building Regulations: Most local authorities now require the application and inspection fees in one hit. VAT is payable but recoverable. If a non-Part ‘P’ electrician is being used, an additional fee of £306.38 + VAT will be payable.

(9) - Service connections: Statutory undertakers will require sight of the proposed houseplans and will require payment of their quotation in full prior to any work being carried out. In addition, they may demand up to six weeks’ prior notice, so it becomes a large upfront payment. The prices are quoted individually and although there is no alternative it is sometimes possible to beat the prices down a little by offering to do some of the work yourself — although you would have to pay other contractors. Work within the highway can only be carried out by approved contractors. These costs are for a home in an average village street with all mains services to hand.

(10) - Site security: On some sites you may be able to get away without this. On others it’s going to be essential from day one. Lock-ups, which are basically second-hand lorry containers, can be purchased for between £650 and £1,100 but it’s often advisable to hire them together with site security fencing. Containers can be hired for £40 per week. A 12- week minimum hire of two-metre-high steel fencing for a 23-metrewide site will cost around £96 per month. A cheaper alternative that can delineate the boundaries and deter casual theft is a roll of orange plastic netting at a cost of £50 + VAT for a 50 x 1 metre roll. Our figures assume these are on site for one month prior to commencement of work.

How to reduce these costs:

• Selling your home yourself can cut out the estate agent’s fees but is not a good idea in the current climate.

• Conveyancers are often cheaper than solicitors. But many of them are ‘call centre’ operations that simply process the legalities. If everything’s straightforward that’s fine, but land tends to contain many of the more complicated legalities and so a more experienced solicitor can be beneficial.

• Cheaper designers are easy to come by. But if you end up paying more in the construction stages or not realising the full potential, it might be a false economy.

• Many people get away with not having site insurance or even a warranty. But many others live to rue the day.

Special thanks to Estimators Limited (estimators-online.com 0161 286 8601) and Design & Materials Limited (designandmaterials.uk.com 0845 404 0400) for their help in the preparation of this series of articles.

More Build Costs:

• Building Foundations
• Floor Structure
• Superstructure
• Roofing
• Drainage
• Electrics
• Heating & Plumbing
• Plastering

Further reading:

• Reclaiming VAT on New Builds
• The Build Cost Calculator
• When is a Plot Not Really a Plot?

How to Find and Buy a Building Plot - This book gives a step-by-step guide to acquiring the right land, with the right permissions at the right price