28.01.2010
The Recession may have had an adverse effect on the property market over the last few years, but building your dream home could be a more viable prospect than ever before. In fact, providing you know what you're getting yourself into, a self-build project could actually be a lucrative way of making money, even during the housing market downturn.
As devotees of design, security and home improvement, Silvelox customers may just find this a rare and exciting opportunity to exploit, particularly if finding your dream home has proved more difficult than anticipated. Glossy property magazines and television programmes such as Grand Designs have inspired a host of aspiring self-builders in recent years, making it a far more realistic dream to fulfil. Last year, self-build specialists, Buildstore, enjoyed a 40% boost in demand for plots of land and financial services, as well as adding a promising 6,000 plots to their PlotSearch site since the beginning of 2009. One of the main reasons for this has been the fall in land prices and recent halt on stamp duty, while suppliers and tradesmen fighting for business have slashed prices of their materials and services, cutting the costs involved in self-build projects.
But embarking on a self-build is not just a way of fulfilling aspirations and creating a 'dream' family home - home-buyers also see it as a way of saving money, particularly as the average self-build project costs anywhere between 25 -40% off a similar ready-made property. This is an attractive way of buyers beating the property slump, particularly if they've lost value on their current home and want the remaining equity to go further.
If the prospect of building your own dream home or making money out of a self-build has given you food for thought, you will of course need to consider the financial logistics of such a project. As a general rule, self-build lenders provide a maximum of 80% mortgages which are paid in instalments rather than upfront. Depending on the lender and the scale of the project, they will then offer either an arrears or an advanced scheme. With the first option, monies are only released once key construction stages are completed, whereas with the advance system, funds are paid out prior to each stage - particularly useful if cash flow is an issue. As with any other property sale, a deposit will also be required which can often be quite hefty, and the self-builder will almost certainly have to sell their existing home to be able to finance the project. However, if you can come up with the initial capital, and are prepared to embark on the blood, sweat and tears of such a large scale project, this could just be a satisfying way of benefitting from the Recession.