Step Three

To get an estimate of your total project costs you also need to take into account all other costs, e.g. plot, professional fees etc. Calculate these and add the total to your build cost estimate for a total project estimate.

Calculate Your Additional Costs

Land Cost: Consult the www.plotfinder.net directory to get an idea of local prices.

Legal Fees: Conveyancing fees, Land Registry fees and local searches will typically cost in the region of £500-1,000. Speak to a solicitor.

Stamp Duty & Land Tax: SDLT will be levied on the purchase of any plot over £60,000. The tax is currently levied at 1% for plots valued from £60,001-£250,000, 3% for plots valued from £250,001 to £500,000 and 4% for plots over £500,000. You will need to complete a land transaction return and file it with the Inland Revenue within 30 days of completion.

Topographical Site Survey: By surveyor or architect. Typical cost £350-500.

Finance Costs: See finance section.

Design Fees: Architects' fees can range from 7-15% of the total build cost for a full service involving design, tender and contract administration. Plan drawing services only are also available from architects and other professionals such as architectural technologists, surveyors, engineers and non-qualified house designers. For planning drawings expect to pay from £2,500-3,500 plus VAT, plus a similar figure for Building Regulation drawings.

Structural Engineers' Fees: Design calculations required for construction details (usually foundations and roof) and as required by building regulations. Typical costs are £400-500. Speak to your designer or a surveyor. Contact RICS 0207 222 7000.

Planning Application Fees: Detailed application fee is currently £220. Speak to your local authority planning department.

Building Regulations Fees: Budget £4-500 upwards for the plan fee and inspection fees. Fees for renovation and conversion work may be higher. Check with your local authority for exact cost details as each authority is free to set its own fees. The NHBC are also able to make the statutory inspections for Building Control purposes. Contact NHBC Solo for Self Build (01494 735760) for details.

Warranty: You need structural defects liability insurance. Typical cost is around 1% of contract value (construction costs). Read �Insurances' in the boxed finance section.

All Risks Self-build Insurance: You will need public liability, employers' liability and site risk insurance. £500-800. See section on insurances.

Services: Connection of water, gas, electricity, telecom and drainage typically total £3,500-6,000. Costs will depend on distance from the Highway, and the location of mains services. Contact your local utility suppliers. For off mains drainage costs contact specialist suppliers.

Demolition Costs: In the case of a replacement dwelling, the cost of demolition needs to be taken into account. Typical cost is £5,000-10,000 excluding the value of any items that have salvage value.

External Works: Typical expenditure on outbuildings and landscaping is around 15% of build costs.

How to Select a Designer

Hiring an experienced designer with a good track record in one-off housebuilding is essential, both in terms of ensuring the house is appropriate for the site, and that it can be built cost effectively. Design has two main stages: Concept/Planning and Detailed Design. Some designers also offer project management services (see above).

Experienced house designers will include chartered architects, architectural technologists, surveyors and engineers, and also partly- or non-qualified house designers. Experience and flair are just as important as qualifications when it comes to house design, so make sure that you meet several designers, visit their projects and talk to their clients before making any decisions. You can find an architect via the RIBA Client Advisory service: 0207 580 5533. Be aware that designers may have different strengths in different areas and that you do not necessarily have to use the same designer for all of the work.

VAT & Self-Build

One advantage of building a new house, as opposed to renovating or extending, is that all of the building work is free of Value Added Tax (VAT), which means a saving of 17.5% at the current rate. If you are using a VAT registered contractor, then all of their invoices for labour and materials should be zero rated to exclude VAT. If you are managing the project yourself and buying materials, you will have to pay the VAT but will be able to claim it back on completion of the project by applying to your local Customs & Excise VAT office. Full details of the refund scheme are available from your local VAT Enquiries Office (listed under Customs & Excise in the phone book). A leaflet entitled VAT refunds for �do-it-yourself' builders and converters (or VAT Notice 719) will be sent to you on request.

The main considerations of the scheme are:

• You are only entitled to claim back VAT if your house is a new building and not an extension and was not constructed in relation to any business activity.
• Your house must be built with the intention of residing in it and not for the purposes of selling or leasing.
• Where you are buying your own materials you should keep all receipts for submission with your claim.
• Where a builder is employed for the supply of materials and/or labour you should not be charged VAT for either. (If you are, contact your local VAT Enquiries Office before you make any payment.) Being registered for VAT, the builder will be able to claim back the VAT on their own return.
• You will not be able to claim back VAT for professional services, eg. architect, surveyor, engineer etc.
• You will not be able to claim back VAT on hire of equipment e.g. JCB, scaffold, power tools etc. However, you may be able to claim if a labour element is involved, e.g. JCB and driver.
• You can only make one claim for a VAT refund and it must be made within three months of completion (receipt of a completion certificate from your local authority). Make sure that all invoices, the planning permission and proof of completion are sent to the VAT office with the claim form.
• You should receive a refund within 30 days of receipt of your claim.
• You do not have to do any of the building work yourself except as the organiser of the construction. You can employ any specialist help you need.

VAT & Conversions

Work involved in creating a �new dwelling' through the conversion of an existing building is also largely free of VAT. VAT registered builders must charge the reduced rate of 5% on the supply of labour and materials which you can later reclaim on completion of the project via your local Customs & Excise office. Details are outlined in the leaflet entitled VAT refunds for �do-it-yourself' builders and converters (VAT Notice 719). Renovation projects are not considered to be �new dwellings' and are therefore fully rated for VAT unless the property has been empty for 3 years or more, or if you are changing the number of units, in which case a reduced rate of 5% is applied. Properties abandoned for 10 years or more are treated as conversions (largely free of VAT).

VAT & Listed Buildings

Work involved in carrying out �approved alterations' to listed buildings can be zero rated by VAT registered contractors, providing the work has been granted listed building consent and is neither a repair or maintenance. Details are available from Customs & Excise and are detailed in VAT � Buildings and Construction (VAT Notice 708).

Capital Gains Tax

Capital Gains Tax is not levied on the sale of your �principal private residence', so the profits from a homebuilding or renovating project are usually totally free of this tax, regardless of the sum involved. There is no published guidance but a period of 12 months is broadly accepted as the period that a dwelling must be occupied before its sale in order to distinguish private homebuilders from commercial developers who might seek to avoid taxation by briefly occupying their developments before selling.

Structural Defects Insurance

Structural Indemnity Insurance/Building Guarantees: Lenders will usually insist that some form of building guarantee is arranged on your new property to insure against latent structural defects. Typical cover will ensure that any problems that arise are remedied both during construction and then at any time up to 10 years after completion. It may be difficult to resell your new property without a building guarantee.

There are currently six types of cover against structural defects that are accepted by most self-build lenders.

1. Architect's (or other recognised professionals) Certificates. Issued by inspecting professionals. RIBA 0207 580 5533
2. NHBC's (National House Building Council's) �Buildmark Warranty'. Issued by NHBC registered contractors only.
3. NHBC �Solo for Self Build'. Contact NHBC Solo for Self Build: 01494 735760
4. Zurich Municipal's �Custombuild Guarantee'. Contact Zurich: 01252 522000
5. The Premier Guarantee (Liberty Syndicates). Contact: 0151 625 3883
6. Project Builder (Liberty Syndicates). Contact Sterling Hamilton Wright: 020 7716 5000
7. Self-build Zone. Contact: 0845 230 9874

For renovations, remodelling and conversion projects, structural defects cover is available from two specialist insurers.

1. Equity Red Star. Contact Holman Insurance Brokers: 020 79778200
2. Zurich Custombuild. Contact Zurich: 01252 522000

Site Insurance & Liability Cover

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:

1. Public Liability Insurance
2. Employer's Liability Insurance
3. 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.

Insurance can be arranged through either your lender or a specialist self-build insurance agent. There are currently five main policies available.

• AXA underwrites a policy for Holbrook Insurance Brokers Ltd: 01483 521650
• AXA Insurance underwrites a policy for DMS Services: 01909 591652
• AXA underwrites BuildStore's BuildCare policy: 0800 1975995
• CGNU underwrites a policy also through DMS Services: 01909 591652
• CGNU underwrites a policy through Sterling Hamilton Wright: 020 7716 5000 available as part of its Project Builder policy.
• Allianz Cornhill underwrites BuildStore's BuildCare policy: 0800 1975995
• ACE Europe underwrites the self-builder.com policy: 0800 018 7660

Renovation & Conversions: For renovation and conversion projects, site insurance is available from the following insurers. Existing structures cover for buildings that are unoccupied before work begins is also available.

• Project Builder (CGNU): Contact Sterling Hamilton Wright: 020 7716 5000
• Equity Red Star: Contact Holman Insurance Brokers: 020 7977 8200
• AXA (via Vulcan Insurance Brokers): Contact DMS Services: 01909 591652
• BuildCare (Allianz Cornhill & AXA): Contact BuildStore: 0800 1975995
• ACE Europe underwrites the self-builder.com policy 0800 018 7660

Essentials Before Starting on Site

As it often takes some weeks to organise temporary supplies it is advisable to contact the relevant authorities well in advance of commencing construction. If you are running the site yourself, this will be up to you to arrange. The site will require temporary services, such as power supply for tools and lighting, and water supply for use when mixing materials and for cleaning and washing purposes. The site must also have WC facilities and somewhere protected from the elements for workmen to eat and take breaks. It is also a good idea to arrange to have a site office.

• Authorities to contact
• Local Electricity Board
• Telephone Company
• Local Water Company
• Environment Agency (if you are unable to construct soakaways).

Alternatively, you could avoid contacting the first three service authorities by replacing them with:

• A chemical toilet
• A generator
• A mobile phone

However, you will almost certainly need a fresh running water supply.

Typical Building Regulations Inspection Stages
Stage of Work Notice Required

• Commencement: 2 days prior to inspection
• Excavation of foundations: 1 day prior to inspection
• Concrete foundations: 1 day prior to inspection
• Damp proof course: 1 day prior to inspection
• Hardcore oversite: 1 day prior to inspection
• Drain connection with sewer: 1 day prior to inspection
• Drains inspection: 1 day prior to inspection
• Drain backfilled and ready for test: within 5 days
• Final Completion or occupation before completion: 5 days prior to inspection

A Typical Self-build Schedule Step by Step

• Arrange a Mortgage In Principle
• Find Potential Plots
• Assess Development Potential
• Plan Budget
• Arrange Valuation of the Plot
• Arrange a Site Survey
• Purchase Site
• Arrange Site Insurance
• Choose Designer and Builders
• Create Your Design
• Get Planning Permission
• Apply for Water and Electricity
• Prepare Detailed Drawings
• Obtain Building Regs Approval
• Put Contract Out to Tender
• Select Builder/Tradesmen
• Arrange Warranty and Insurances
• Clear Site/Create Access
• Set Out and Dig Trenches
• Pour Concrete/Prepare Oversite
• Build Structure/Timber Frame Erecting Scaffold as Required.
• Build Roof Structure and Tile
• Make Weathertight
• Fix Rainwater Goods/External Decoration,Remove Scaffold
• First Fix Carpentry, Plumbing and Electrics
• Plaster Out Walls and Ceilings
• Lay Hard Floor Finishes
• Connect House to Mains Services
• Second Fix Carpentry, Plumbing and Electrics
• Decoration and Ceramic Tiling
• Landscaping, Driveway, Paths etc.
• Arrange for Final Inspection
• Completion/Moving In
• Correcting any defects