The hidden costs of building Part 1

Previously we have suggested that using typical square foot/metre costs as they can be extremely misleading unless you have previously built a particular style and quality of house, in the same area with the same labour force. Experience shows there are very many variables that can significantly affect your costs.

In addition to the basic build costs there are a number of significant “secondary “costs that can catch you out. This short article highlights a few hidden costs that can creep up on the unwary before you have hardly got out of the ground.

  1. Site Appraisal costs

Whilst I don’t encourage the amateur self-builder to undertake an entire site assessment themselves, in the early stages of plot hunting it will certainly help you filter out some of the poorer sites and help you avoid fruitless expense on detailed site investigations if you can do a little research yourself. Consider general ground conditions, looking out for clay and trees, made ground, sloping sites, nearby mining & extraction as well as distance to services. Once you have found a site you are keen on, arrange a site survey with a professional surveyor or Engineer.

Site survey circa £500-700

Trial Holes by JCB circa £300 per day

  1. Sloping Sites

Projects on sloping sites always cost more due to the need for specialist foundations and/or site levelling. Many designers will try to take advantage of the slope to create basements. This form of construction always leads to higher costs due to the need to provide retaining walls and waterproofing. Sloping plots can also give you problems with drainage, often requiring deep drains or the installation of a pump if the drainage falls are against you, again adding to your build costs. Best advice in the case of sloping sites would be to involve an Engineer to investigate the conditions to get a realistic estimate of costs early on (or better still look for a level site!)

Deeper foundations £10,000-20000

Site Levelling by JCB £250-300 per day

Spoil Removal circa £35-40 per cubic metre

Installation of a pump for foul drainage £5000+

Site survey (see above)

  1. Trees

A site with even a few trees can cause additional expense. The presence of trees may mean that the foundations have to be modified to take account of their roots. If the house is very close to the trees, damage can be caused by the mechanical movement of their roots.

A more common problem is the damage caused by the drying out of the ground during the summer months. In some ground conditions, shrinkable clays ‘shrink’ as moisture from the ground is absorbed by the tree. This can cause the ground to move causing major structural damage to the foundations. To combat this you will find that you will have to construct very deep foundations, particularly with some high water absorption trees and/or where the ground is known to be shrinkable. NHBC provide detailed advice on this problem.

Incidentally solving the problem is not simply a case of chopping the tree down, as the ground may then swell causing the soil to “heave” applying lateral pressures to the foundations and causing equally as much damage to the foundations as the shrinkage. Because of this, it is becoming increasingly common for building inspectors and insurers to insist not only on deep foundations but also to provide a foundation system, which resist these lateral forces. It is certainly worth having a discussion with your local building inspector to determine whether shrinkable clay is a problem in your area. It is also useful getting a JCB on site to dig some trial holes. If you find that you have a nice sandy soil, you have no problems; on the other hand if the clay is more “plastic” in appearance, you should start to worry.

Clearly once you have completed your build it makes sense to keep trees well away from the house. Be aware that as a tree grows it may potentially cause a risk to your building and (as you can see from the comment above) felling it later may not remove the risk, the advice is don’t plant trees  too near to your house.

Take care on any plot that contains protected trees, particularly if they stand near or on the intended position of your house footprint. Our friends at the planning department are very precious about trees and can insist that the house is positioned in some very odd places! Take advice early from your local planner and engineer.

Accommodating shrinkable clay and trees up to £10,000-20000

  1. Site Acquisition costs

Legal fees can easily cost you several thousand pounds so ask for a quote from your solicitor before you start. Don’t forget to budget for land registry fees, local searches and of course Stamp Duty. Stamp Duty is a government tax on property or land purchase and will be collected by your solicitor on completion of the purchase of the land.

Solicitors Fees £750-2000+

Stamp Duty:

You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England, Wales and Northern Ireland. The current SDLT threshold is £125,000 for residential properties and £150,000 for non-residential land and properties. On a piece of land costing you between £125-250000 you’ll currently pay 2% and between £250k and 925k 5%.

SDLT no longer applies in Scotland. Instead you pay Land and Buildings Transaction Tax when you buy a property.

How much you pay depends on whether the land or property is:

  • residential
  • non-residential or mixed-use

You can use HM Revenue and Customs’ (HMRC) Stamp Duty Land Tax calculator to work out how much tax you’ll pay. Visit

Purchase price bands (£) Percentage rate (%)
Up to 125,000 0
Above 125,000 and up to 250,000 2
Above 250,000 and up to 925,000 5
Above 925,000 and up to 1,500,000 10
Above 1,500,000+ 12
  1. Finance Fees

Costs involved in borrowing the money to build your property can be significant including, mortgage arrangement fees, land valuation, early redemption penalties and interest over the course of your build.

A mortgage arrangement fee is a charge for setting up the mortgage you want and is levied by your lender or broker at the outset. To obtain finance for your project your lender will also want to undertake an independent valuation on your land (paid for by you) to satisfy themselves that their funding is secure … But note that this does not guarantee that the land or property is worth the amount you are paying for it. Once your project is underway, further fees are typically payable for re-inspection of the building work if you go for a stage payment option.

Over the course of your project, mortgage or loan interest can quickly build up so the speed of constructing the project is an important aspect. It is crucial that a realistic build program is planned to take this in to account. As well as ensuring that the vital cash to complete is available.

When your project is finished, an early redemption penalty maybe charged if you leave your mortgage deal before the agreed date (dependent on your mortgage). So, make sure that you get advice from a financial advisor on the best deal for you before you sign.

Mortgage Arrangement Fee £200-300

Valuation Fee £160-300

Re-inspection Fee £30-£40 for each of stage payments- check with your lender

Early Redemption Penalty varies lender to lender- check with your lender

This article was written by Adrian Wild, founder of HBXL Building Software and the HBXL Estimating Service in partnership with Ecomerchant. To find out how we can help ensure you provide professional, accurate quotations, give Ian a call on 0117 9167894, or drop us an email.