First find a good plot then make up storeys

Esther Shaw sees how to join the 20,000 Britons who buy land and put up their own houses each year
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Amid wobbly forecasts for the UK housing market, one of its more sturdy sectors stands out: self-build.

Amid wobbly forecasts for the UK housing market, one of its more sturdy sectors stands out: self-build.

While the Council of Mortgage Lenders reports that overall year-on-year lending was down by nearly a fifth in February, mortgages for self-builds were on the increase.

Specialist company Buildstore, which arranges self-build loans through Skipton building society and The Mortgage Business (part of HBOS) among others, says loan applications for February stood at £70m - up by 51 per cent on last year.

You might argue that self-build is a misnomer, as most people hire builders and architects to carry out the heavy work. But more than 20,000 people build their own homes in the UK each year, tempted by saving nearly a third on the cost of a newly built property, according to figures from Norwich & Peterborough (N&P) building society, which also provides self-build loans.

This leaves you with a bigger home for your money as well as the ability to design the house to your own tastes and needs.

Building the perfect property is not easy, of course, and the main obstacles between you and your dream home are finding land, getting planning permission and securing the finance.

Land is expensive - although an inner-city plot in Plymouth, say, will usually cost far less than a comparable one in central London - but exactly how expensive will depend on who's selling the land and its exact location.

To help in your search, there are a number of specialist "land seeking" agencies and online plot development sites such as www.plotfinder.net and www. plotbrowser.com, as well as council planning departments.

On a practical level, look for a plot that already has either outline or detailed planning permission, but make sure a sur- veyor inspects it before you commit to buying. He will give an idea of the likely building cost and any potential problems, says Stephen Penlington of N&P.

Arranging the right finance for your self-build is crucial - and unless you're able to pay upfront, you'll need a specialist loan.

Two types of self-build mortgages are now available; an "arrears" payment loan that re- leases cash in stages, and a more flexible "advance" deal that releases more money earlier.

The former suits buyers with a sizeable sum to start with, since the mortgage only pays out once certain construction targets have been reached on the house. For example, N&P's self-build mortgage releases one chunk of cash on completion of the "first floor joist level", and another at "roofed-in stage".

These staggered payments can also save you money, says Mr Penlington, since you don't pay interest on the overall loan - just the sums released.

If you're short of funds, an "advance" loan - one is available via Buildstore, called the Accelerator - lets you borrow up to 95 per cent of the cost of the plot or house in advance. This means you can get your hands on cash if you need to pay for materials or extra workmen in an emergency. Given the high chance of costs spiralling, it's probably worth budgeting for an extra 5 to 10 per cent at the outset, in any case.

Site insurance is a good idea while workmen are putting up your property since it covers you for employer's liability and public liability - as well as losses such as fire, theft, storm damage and accidental damage.

Kevin McCabe constructed his own home two and a half years ago - and genuinely did it himself. As a builder, he put together the house in Ottery St Mary, Devon, for himself and his wife Rosemary. Financed by a loan from Standard Life Bank, he used local materials including sub-soil, clay and straw to build a traditional cob house.

"You can make savings [with self-build] but it costs a lot in time and effort," he says. "It's more about the satisfaction of designing a home we want to live in."

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