How to decide whether to buy a house or build one

With 2022 seeing average UK house prices exceeding £260,000 for the first time, many people are exploring the possibility of building their own home.

While both buying and building come with their advantages, it’s worth knowing the downfalls of both sides.

This guest blog by Martha Lott, senior digital content executive with CompareMyMove.com, explores both options, examining:

• the costs
• timescales
• advantages and disadvantages

Read on and then you will be able to weigh up your options.

Buying a Home

Buying a house comes with costs, many of which people forget to factor in. Below we will explore the costs, timescale, advantages and disadvantages that come with buying a house.

The costs

• Deposit – You’ll need at least a 10% deposit to buy a house with a mortgage. This will usually be 10% of the property’s value but can sometimes be more.
• Conveyancing fees – Conveyancing costs for the average UK house price are £1,040 but will vary depending on property value, location and difficulty of your conveyancing case.
• Surveying fees – You’ll need to factor in property survey costs when buying a house. Survey fees will cost anywhere between £290-£1,390 depending on the value of the house, location and type of survey.

• Removal costs – Don’t forget to factor in your removal company cost by booking in advance. You’ll also avoid disappointment as they fill up quickly during summer, which is peak time.
• Mortgage fees – You usually will have to pay a fee when taking out a mortgage which is, on average, between £200-£1,000. If you’re using a mortgage broker, they will require a fee of between £300-600.
• Stamp duty – You’ll have to pay Stamp Duty in England and Northern Ireland; Land and Buildings Transaction Tax in Scotland and Land Transaction Tax in Wales within 30 days of completion. If you’re a first-time buyer, you’ll pay 5% Stamp Duty if the property is over £300,000 in England.

The timescale

• Apply for a mortgage in principle – You should have a mortgage in principle in place when viewing properties as it makes you a serious buyer. Many estate agents will ask for your mortgage in principle once your offer has been accepted.
• Instruct a conveyancer – Once your offer has been accepted, you can instruct your conveyancer to begin.
• Conveyancer orders searches – Your conveyancing solicitor will order searches early on in the process as these can take a while to be returned, depending on your local council. This typically takes between 3-6 weeks.
• Get a property survey – While waiting for search results, you should get a property survey to reveal any hidden defects the property may have.
• Exchange contracts – Exchanging contracts typically happens between 1-3 weeks after your searches have been returned.
• Completion day – Completion usually happens 1-2 weeks after you’ve exchanged contracts, and this is the day you’ll move in.

Advantages of buying a home

• You can take out a mortgage, so you don’t need the money upfront
• You can find affordable property in the right location
• The process is generally quicker
• There are more housing options available than plots to buy

Disadvantages of buying a home

• You must pay Stamp Duty
• You’re not as in control as you are with building a home
• You can’t pick and choose your building materials
• Energy bills are expensive, with only 40% of homes meeting energy standards

Building a Home

Building your own home will mean your house is truly unique, but it’s not a feasible option for everyone. The biggest argument against building a home is the higher costs and longer timescale. Below we will break down the costs, timescale, advantages and disadvantages of building your own home.

The costs

• According to Urban, the average cost to build a 2-bedroom house in the UK is between £187,625 and £281,437, however, there are many factors to consider on top of the cost of the plot.
• Plot fees – UK plot fees can cost anywhere between £1,00 to £3,000 per m² depending on location.
• Planning permission – You’ll need to apply for planning permission and will have to submit detailed building drawings to secure approved building regulations. This will cost roughly £400.
• Land survey costs – Land survey costs vary between £400 to £600 and will ensure the land is safe to build on. They’ll look at flood risks and any issues with trees nearby.
• Substructure – The type of foundations and drains needed will depend on the condition of the ground and your planning permissions, but average at £150 per m².
• Superstructure – This will be the biggest cost involved with building a home and includes the external and internal walls, external cladding, roof structure, etc. This typically costs £550 per m².

• Architect fees – The cost for the architect’s designs will be between 5% to 15% of the total cost and will vary depending on the complexity and size of the project.
• Services and fit – central heating, plumbing, ventilation as well as fitting kitchen and bathroom, tiles etc.

The timescale

It takes about a year to build a house if everything goes to plan. Many people find it takes longer than this, as there is currently a waiting time for building materials and there may well be mix-ups and delays over orders. 

Advantages of building a home

Your home will be unique

You choose the materials and features

If you stick to a budget, it can be cheaper than buying

You can design your home to be eco-friendly to save on energy bills

Disadvantages of building a home

Extreme weather can affect progress

Delays or shortages of building materials can affect the entire process

Could experience issues with cash-flow

Getting a mortgage is difficult, so you’ll need the money ready

Labour costs are expensive

The areas with the lowest house asking price:

The North of England has seen the lowest growth in house prices during the last 10 years, house prices changes by area with average prices remaining under £200,000, well below the UK ’s average.

Building issues due to Covid-19 and Brexit

There has been a backlog of work resulting from the multiple lockdowns, so the process will take longer in 2022. Building materials are also taking longer to get hold of due to Brexit issues, resulting in increased prices. This is something you should consider if you plan to build your home.

What are Tiny Homes?

‘Tiny homes’ are an ideal option if you can’t decide whether to buy or build as they are part self-build and part caravan, offering an eco and budget-friendly alternative to get on the property ladder. You can get a basic tiny home for as little as £25,000.

They are low cost and quicker to build than a self-build, with the aim that you have everything you need in a small space. You will need planning permission if the house is the sole dwelling or used as a standalone dwelling.

Should I Buy or Build?

Buying a house is usually the safer financial option as you can take out a mortgage and pay it back monthly. With building a home, it’s more difficult to secure a self-build mortgage and if you run out of money during the process, you might have to take out a loan. Rest assured, you can both buy and build a property for an affordable price if you look in the right location and stick to your budget. Ultimately, the choice is yours, and what works for some may not work for others.

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