Adding Up

We are now deep into the second week of the build. Work is progressing swiftly and, as expected, throwing up new design challenges and forcing us to make budget-impacting decisions along the way.

Now seems like a good time to talk about how we budgeted for this build and give you an idea of the level of detail involved to help us make good decisions.

As soon as we found the plot last year my well developed accounting muscles kicked into gear. We created the first draft of our budget template (oh yes, many iterations have since followed), and with the combined insight of Lanre, my husband and architect, and our mortgage broker, we started to piece together the various elements that this build would demand.

This included:

The deposit for the land

Solicitors fees

Stamp duty

Party wall surveyors fees

Building control fees

Building insurance premiums

Soil test fees so we understood what was waiting for us as we began to dig the basement

A ‘cost per square metre’ estimate to cover the construction costs plus an additional 7.5% contingency.

(The list is actually much longer, but hopefully this gives you a flavour.)

This combined total cost is what we used to evaluate what we would offer to pay for the plot (you may remember that our winning offer was £60k below the original asking price) and the wiggle room we had to play with.

What makes building our home viable for us is that the estimated value of the finished house (that’s land, professional fees, and construction costs) will be 20% more than what it will have cost us to build. For a developer this might not be much of a margin, but, for us, it means that we get to live in a house that we have built, on a road where house prices are on average 25% more than our home will have cost us to build.

Looking back, I’m glad we did this work upfront as we were moving forward with our eyes wide open, feet grounded in reality.