Stage 1: Before you buy the plot

The question at this stage is not “what will it cost”. It is “can we afford to do this at all, and what would have to change if we cannot”.

Almost everybody starts by asking what a house costs per square metre, gets a number, and multiplies. That is not wrong, but it answers about two thirds of the question, and the missing third is where budgets break.

1.1 What a build actually costs

The single most common reason a self-build budget is wrong is that it only ever counted the house.

When people say “our budget is £385,000” they almost always mean the builder’s price. The builder’s price is the largest single number in a self-build, and it is usually somewhere around three quarters of what the project actually costs. Everything else is real, unavoidable, and invisible until you go looking for it.

Here is what sits outside the builder’s price on a typical new build.

The land, and getting it. The plot itself, stamp duty on it, your solicitor’s fees, searches, and any survey you commission before you commit.

The professional team. An architect or designer. A structural engineer, who is usually a separate appointment even when your architect arranges it. Possibly an ecologist, an arboriculturist, a drainage consultant or an energy assessor, depending on your site and your planning conditions. A party wall surveyor if you have close neighbours.

Statutory costs. The planning application fee, and then a fee for discharging each planning condition, which surprises people because they thought the permission was the end of it. Building control, whether through the council or an approved inspector. A structural warranty, which is ten years of cover on the building and which your lender will insist on. Community Infrastructure Levy, which can be tens of thousands of pounds and which self-builders can usually be exempted from, but only by submitting the right forms before starting work.

Getting services to the site. Electricity, water, drainage, telecoms. The cost is mostly a function of distance: a plot ninety metres from the nearest electricity connection is a materially different purchase from one with a supply at the boundary, and the asking price rarely reflects that.

The things you buy yourself. Most self-builders buy their own kitchen, bathrooms, flooring, appliances and landscaping, because they want to choose them. These sit outside the builder’s contract and they add up fast.

Running the project. Site insurance. Somewhere to live while you build, whether that is rent or a mortgage on the house you have not sold. Storage for the contents of it.

The money itself. Arrangement fees. Interest on the borrowing during the build, which you pay for months before you live in the house. A valuation fee at each mortgage drawdown.

And contingency. Money held for the things nobody can predict. More on this in Stage 2, because how you hold it matters more than how much it is.

The tool: the Total Project Cost Checklist. Work down it and put your own figure against every line. Where a line does not apply to you, put a zero rather than deleting it, so that you can prove to yourself later that you considered it. Where you do not know, put your best guess and mark it as a guess. The gap between your total and the money you actually have is the only number that matters at this stage.

1.2 Working out whether you can afford it

Now you can ask the affordability question honestly.

The method is deliberately crude, because at this stage precision would be a lie. You have no drawings. Nobody can price a house that has not been designed. What you can do is take the size of house you want, multiply it by a rate per square metre that reflects the quality you want and the market you are in, and then add everything from section 1.1.

Use a range, not a number. A single figure at this stage carries a false authority. Three figures, a low, a likely and a high, tell you something a single one cannot: how much room you have, and how quickly the project stops being affordable if things go against you.

Where the rate comes from. Ask two local builders what they are building at per square metre this year and use that. Published figures in self-build magazines are a starting point but they lag the market and they average across the whole country, and construction costs vary enormously by region, by the shape of the building and by how much of it is kitchen and bathroom.

A simple, boxy, two-storey house is cheaper per square metre than a complicated one of the same area. Ground floor area is more expensive than first floor area, because the ground floor carries the foundations and the first floor sits on walls that already exist. A house with three bathrooms costs more than a house with one, and the floor area does not change.

Then add the plot’s own risks, which is section 1.3, and then add fees, statutory costs and contingency as percentages of construction. Around 10 per cent for professional fees, around 5 per cent for statutory and connections, and never less than 10 per cent for contingency.

The tool: the Feasibility Budget Calculator. It does this arithmetic and shows the three figures side by side. It is not a cost plan and it says so on the sheet: once you have drawings, it is replaced by the real thing.

1.3 Reading a plot for cost

Two plots at the same asking price are rarely the same purchase. The difference between a plot bargain and a plot trap is almost entirely cost that the asking price does not show, and most of it is underground, in the planning file, or in the distance to the nearest sewer.

Twenty questions separate them. They fall into five groups.

Getting to it and onto it. Can a lorry reach the plot and turn round? Is the access shared, and is there a written right of way rather than a neighbourly arrangement? Do you need a new dropped kerb, which needs a council licence? Is there anywhere to store materials and park, or will everything have to be delivered just in time, which costs more?

The ground. Has anyone done a ground investigation? A sloping site needs retaining structures and more groundwork. Made ground, filled ground or a former industrial use can mean piling, deep foundations or remediation, any of which can add a five-figure sum before you are out of the ground. Trees, particularly protected ones, change your foundation design because you cannot build within their root protection area. And if water sits anywhere on the plot after rain, find out why.

What is already there. Anything standing has to come down, and demolition costs money and time. Old foundations, slabs and buried tanks are worse, because you find them after you have started. Asbestos in an existing building is a specialist removal. Overhead lines and poles may need diverting, which is slow and expensive.

Getting services in. The rule of thumb is that the cost is roughly proportional to the distance from the nearest connection, and the quotes from network operators are free to obtain and worth obtaining before you bid.

The paperwork. Does it have planning permission, and when does it expire? What conditions are attached, and what does each one cost to discharge? Are there covenants, easements or rights of way over the land? Is Community Infrastructure Levy payable, and does the self-build exemption apply?

On CIL, one specific warning. The self-build exemption is available to most people building their own home, and it is worth a great deal of money. It is also lost entirely if the forms are not submitted, and the commencement notice served, before work starts on site. There is no discretion in it. People have lost five-figure sums to a form they did not know existed.

The tool: the Plot Cost Risk Checklist. Take it with you when you visit. Every “Unknown” still on it when you exchange is a cost you have agreed to carry without knowing its size. That is sometimes the right decision. It should never be an accidental one.

What Stage 1 leaves you with

Three things, and a decision.

1. A list of every cost your project carries, with a figure or a marked guess against each.
2. A range for what it would cost to build, on a basis you can state.
3. A list of what this particular plot adds, and what you still do not know about it.

The decision is whether the likely figure fits inside the money you have, with the contingency intact. If it does not, you now know by how much, which is the difference between changing the plan and abandoning it.