________________So you’ve decided to buy some land and build an off-grid home. Good luck.
If you are in the United States, chances are strong you will succeed. In the UK and Canada you will be beset by bureaucracy and even if you triumph over the system, there are plenty other traps for the unwary. Here is a checklist of simple ways to stay on top and out of trouble.
Time is money
Unless you are going for a second home, building your off-grid place is no quick route to home ownership and it takes an average of about two years from finding a plot to moving in, so make sure you factor in the cost of renting or paying the mortgage on your existing home over this period. Half of this time is likely to be spent securing the relevant permissions and finding contractors.
Beware of false economies
Scrimping on building materials, opting for the cheapest contractors without checking out their credentials first or over-estimating your own building capabilities by trying to do too much yourself, could all create problems for the future. If a job calls for an expert, then use one.
Get permission
Before buying land make sure it has valid outline planning permission, although there may still be restrictions on what you can build so be careful. It may be worth buying land which already has a rundown building on it that you could replace. While this will have a higher upfront cost than an empty plot, you could save money if it is already connected to electricity, gas, water and drainage services. Find out more about planning permission on the UK Government’s planning portal at bit.ly/juTlPo.
Finding the right plot
You can search for land on many conventional property websites such as Rightmove.co.uk, Findaproperty.com, Primelocation.com andZoopla.co.uk, however, there are also specialist land websites such as Plotbrowser.com, Plotfinder.net and Plotsearch.co.uk. The average cost of a plot in the UK last year was £138,206, according to Plotsearch.
However, you must beware land scams, where companies sell plots that are never likely to get planning permission — visit Propertyscam.co.uk or see the Financial Services Authority’s (FSA’s) website for more information. Never buy land from a cold-caller promising that it will soar in value. The DirectGov website has more help on avoiding the pitfalls at bit.ly/Irusur.
Keep stamp-duty costs down
The good news is that you only have to pay this tax on the value of the plot because you are purchasing this before it has been built on. This means you have a better chance of staying under the stamp-duty threshold of £125,000 than if you were buying a ready-built house. Above this threshold you pay 1 per cent on land worth up to £250,000, 3 per cent on plots worth up to £500,000 and so on up to 7 per cent for land worth more than £2 million.
Get the right mortgage
There are two types of mortgage that you can get for a self-build project — the advance-stage or accelerator mortgage, which provides money ahead of each phase of building, or the arrears-stage system, which only pays out the cash after each phase has been completed. Many self-builders will not have another source of finance and will need the accelerator-type mortgage. You can usually borrow up to 85 per cent of the land’s value and the same percentage of the building costs, although some lenders will go up to 90 per cent for borrowers with a high credit score. Buildstore.co.uk offers a number of exclusive deals that it has secured with lenders, including an accelerator three-year variable rate starting at 5.24 per cent from Melton Mowbray Building Society at up to 75 per cent loan-to-value with a 1 per cent fee.
Remember ongoing mortgage fees
You will also have to factor in the cost of needing to have your property reviewed by the lender to check its progress at various stages in order to release more funds. These are usually around £70 per re-inspection and you are likely to require up to six visits.
Stick to your budget
One of the biggest obstacles to self-build projects is running out of money, so make sure you factor in all the costs and set aside a contingency fund of between 10 per cent and 20 per cent for unforeseen expenses. Try to avoid making significant changes to your plans mid-project as this will seriously increase costs. You will be able to claim back some of the VAT on your building costs, so keep receipts and detailed records. Use an online calculator, such as the one from Buildstore.co. uk (bit.ly/y5TIE) to estimate your costs upfront
Tap into online resources
he UK Government has launched a new portal to provide information and contacts for self-builders (selfbuildportal.org.uk). “Self-build” can mean anything from undertaking construction work, to hiring contractors or buying a kit home. The information hub outlines the pros and cons of each as well as providing a list of all the lenders that offer mortgages on projects like this.