Making self-building affordable

Building your own home is exciting, but as the TV show Grand Designs often shows, it also presents a few challenges along the way. Unexpected costs are inevitable, so our SelfBuild Insurance experts have some practical advice for protecting your house-building budget.

The numbers

The Planning Portal numbers show that self-build homes account for 7-10% of new homes built in England every year – approximately 12,000 homes. This is in stark contrast to Europe, where the numbers are much higher. Self-builds make up over 50% of all new homes built in Germany.

According to the National Custom and Self Build Association (NaCSBA), the number of registered self-build homes increased by 8% for individuals and 6% for groups compared to the previous year. NaCSBA believes the number of self-build projects is higher because the registers only capture a fraction of the broader demand.

The same figures show that the number of councils with adopted percentage policies has grown by just five on the previous year to 39 councils, with 49 councils having draft policies. According to NaCSBA, this slow increase is due to many councils halting their local planning process because they're waiting for Government to implement new government planning changes.

Minimising additional unexpected costs

Most self-builders will want to work to a set budget, particularly given the impact of inflation on things like materials and labour. Some only consider insurance once they start building on their plot, but purchasing insurance when you exchange contracts protects your plot. Once the land is bought, it's exposed to all kinds of risks.

Selfbuild insurance policies cover a range of risks in one straightforward policy. This includes the potential for members of the public to get injured, to cover worker injuries on site, plant, materials and the works in progress. The cover remains in place until building control approves the new property. Insurers calculate premiums on the professional reinstatement cost of the property (the cost of rebuilding it). Insurance cover is available in monthly increments (three, six, nine, 12, 18 or 24 months etc) or until the project is complete.

What incentives are available for self-builders?

The Government has made self-building your home more accessible by offering funded loan schemes in England, Scotland and Wales.

In England, the Government's £150 million Help to Build scheme offers an equity loan to help with the cost of buying the land and building your home. Self-build mortgages are available from registered Help to Buy lenders, with a minimum 5% deposit. Mortgages are interest-only until the building is complete, and then the Help to Build loan is paid to the mortgage provider. The scheme reduces the cost of repayments, and the loan is interest-free for the first five years.

Find out more:

Scotland: Self-Build Loan fund

Wales: Self-Build Wales

England: Help to Build a Loan

With thorough preparation, a self-built home can be a rewarding and cost-effective way to own your own uniquely designed home.