Can't find a dream home? Then create your own...

The self-build property market is booming, says David Prosser
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The Independent Online

House prices keep on climbing, and more people than ever are finding themselves priced out of the type of property they really want to buy.

This soaring cost is the chief factor behind a boom in the self-build property market, analysts claim. More than 20,000 people built their own home last year, in a market that is now estimated to be worth up to £7bn a year. John Hay, of Buildstore, a company set up specifically to target self-builders, says: "We reckon the average person building their own home ends up with a property worth 25 to 35 per cent more than its cost." Put another way, building your own home gives you access to a property that would cost up to a third more than you could afford on the open market.

And building your own home does not necessarily require a crash course in construction, plumbing and electrics. "Very few self-builders do much of the work themselves," Hay adds. "The most value that self-builders bring to the project is in their management time and skills."

But don't make the mistake of thinking self-build will be easy. Terence Blacker, the novelist, who built his own home in Norfolk four years ago (see story, right), says it's important to be realistic. "Everyone underestimates the difficulties of self-building and emphasises the glamour - the idea that this is a great way of making money is quite wrong," Blacker says.

The best self-build projects are those that have been meticulously planned. Even before you've identified a plot of land on which to build, it's worth talking to lenders about how much you might be able to borrow. You can also take early soundings from architects and builders.

The next stage is to start looking for land. Talk to land agents, scan classified advertising and search the internet - or use word of mouth. If this doesn't work, Buildstore maintains a service called Plotsearch, which has details of land available all over the country - search for a fee of £35.

Don't assume that you need an empty piece of land and bear in mind that you will pay more for land with outline planning permission for a home already granted.

Once you've identified your target plot, you can hold more substantive talks with builders and architects about costings. You will need budgeting information in order to apply for a mortgage. Since most plots go to auction, the majority of buyers need a firm mortgage offer in place to buy the land.

Two types of mortgage appeal to self-builders. "The traditional way of financing this is with a mortgage where the funds are released at each stage of the process," says David Hollingworth, of independent adviser London & Country.

With this sort of loan, pioneered in particular by Norwich & Peterborough Building Society, you ask for the full amount needed to finance the project. If successful, the money will be released in slices. Typically, the money is paid in arrears, so you need to have capital in place to pay builders and others until you get each slice of cash.

The alternative is the accelerator mortgage, promoted by Buildstore. With these loans, the cash for each stage is available in advance. Bear in mind that you'll still have to make repayments on the new mortgage, as well as servicing any borrowing you have on your existing property.

With your finances in place - and the land secured - the easy bit of a self-build project is over. Getting the property built is the next challenge. Norwich & Peterborough publishes an excellent guide to self-build and there is also help available in magazines, from sales fairs and from specialists such as Buildstore.

Managing the planning and building processes are separate steps, but the more work you can do yourself, the lower your costs will be. Get as many quotes as possible and remember that you can claim backVAT on all materials used in the build.

Ben and Merry Albright, from Pembridge in Herefordshire, built their first home in their early 20s. Two years ago, Ben, a sales manager, and Merry, a full-time mum, sold the property and began building another house nearby. The home was featured on Channel 4's Grand Designs and won the 2006 Eco-Build Award.

"Seven years ago, we were looking to buy our first home and wanted to stay close to my childhood home, but everything was out of our price range," says Merry, now 30. "We found a plot in the next village where the developer had had planning problems and we bought it cheap."

In all, their first home cost around £130,000, which they raised with a self-build mortgage from Norwich & Peterborough, and two years ago they were able to sell the house for £300,000. All of that money went on building their new home, a four-bedroom property in the same village, which hasbeen valued at £400,000.

Terence Blacker: 'I was the most unlikely self builder imaginable'

It was, in retrospect, a crazy idea to have a house built while I lived in a caravan in a field, and I was the most unlikely self-builder imaginable. I preferred old houses and had lived in a 17th-century Suffolk farmhouse until, post-divorce, I had to move out. I began to look for something similar but, for the money I had to spend, there was nothing worth buying.

After four months of looking for a house with my girlfriend, the only place that appealed to us was a place outside Diss, which had a field, a view and a moat - but no house. What was being sold was a block-built, timber-clad shed that had been built in 1990. Extraordinarily, it was being sold with planning permission. All the same, it seemed at £275,000 absurdly expensive. But we wanted that shed. It would be a perfect house for us.

We bought a small Sprite Musketeer caravan and in May 2002, and as the weather improved, we parked it in the field in front of the shed and awaited the builders.

I hesitate to say it, because of how unusually lucky I have been, but overseeing the building of a house in which I was to live was a wonderful, exciting adventure. There were the usual nightmares - planning, cash crises, cock-ups, unreliable suppliers - but on the design side we had the help of a friend, and also a builder, Vic Beales. Vic and his team finished on time and within budget, six months to the day they started.

Self-building can be self-ruining. It helps if there are two of you to share the work and the stress. You need, above all else, to share an attitude and a vision.

Had I tried to sell this house on completion, I would done little more than earn back my investment. But it is a great place and to have been involved in its creation was a privilege.

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