How much it really costs to build a house

Building your own home from scratch puts you in the driving seat.

Whether you want a quaint English country house or modern clean architecture, antique bathroom fittings or art deco marble worktops – taking on a self-build project is one way to make your dream home plans a reality.

Despite the possibilities, self-building in the UK is uncommon. Only 5,182 planning permissions were granted between October 2022 and October 2023 for serviced plots suitable for self and custom build, a decrease of 18% from the previous year, according to the government.

However, if you’re one of those weighing up whether to build a house from scratch, Telegraph Money has the tips to put you on the right track. In this article, we will cover:

• How much does it cost to build a house?
• Building vs buying vs renovating
• Seven things to consider before you build a property
• FAQs

How much does it cost to build a house?

According to professional estimators at the company Checkatrade, average house-building costs were estimated to be:

• Building cost per sq m: £2,387.50
• Average cost to build 2 bedroom house: £226,812
• Average cost to build 3 bedroom house: £286,500
• Average cost to build 4 bedroom house: £358,125.

Average costs don’t give you the full picture, but they’re a good place to start.

However, there are a host of inputs that contribute to the building cost, and they can vary hugely depending on factors such as location and materials.

Between £1,775 to £3,000 per square metre is considered a typical national range. However, architect Tamsin Bryant of ABL3 Architects says for her projects, located from Hampshire to Devon, the range is £2,500 to upwards of £4,000 per square metre.

Your costs can be affected by the following factors:

• Construction type and design complexity
• Materials
• Professional services

Construction type and design complexity

The size of your property, its structure and the region in which you’re building will impact your construction costs greatly, says Tim Phillips, quantity surveyor for the Homebuilding & Renovating Show.

“London is always expensive, but right now so is Yorkshire & Humberside due to supply and demand for materials,” he added.

In order of cheapest to most expensive, the main types of construction are:

1. Brick and block
2. Timber frame
3. Structural Insulated Panel Systems (SIPs)
4. Insulated Concrete Formwork (ICF)

Experts recommend getting the building structure wind and watertight before turning your attention to fitting out your new home.

Materials

Choosing the materials for your home, such as timber or stone flooring, oak doors, kitchen worktops and bathroom finishes, is the part most self-builders love the most. But it’s also the phase of the project most likely to blow the budget.

There are plenty of opportunities to save money without compromising on your design, said Mr Phillips.

“You might want oak floors, skirtings and joinery downstairs, but do you really need them upstairs in your three-year-old’s bedroom? You could choose a cheaper wood instead and stain it with an oak finish.”

Professional services

Depending on your own level of experience, your time and how wedded you are to your budget will influence the team of professionals you hire.

These could include:

• Architects
• Planning consultants
• Project manager
• Building team
• Quantity surveyor
• Structural engineer
• Mechanical and electrical engineers

Mr Carter-Brown said: “If you want certainty over cost, you have to spend time and money with a design team up front. Appoint an architect to draw up the designs. Once you have your bundle of drawings, hand them to a quantity surveyor who will run a tape measure over the whole project to give you a price, covering every nut, bolt and screw.

“If you have a contingency fund, or access to money elsewhere, you may take a more relaxed approach.”

A rule of thumb for a contingency fund is 15pc of your total building costs.

Building vs buying vs renovating

When weighing up whether to build, buy or renovate, time is a bigger factor to consider than cost, according to Ms Bryant.

“If you buy a turnkey property you can obviously move straight in,” she said. “If you’re renovating you’ll have to wait for planning permission, and then for the works to be completed. If you’re building it yourself it’s an even lengthier process which could take up 50pc more time.”

The benefit of choosing the self-build option, adds Ms Bryant, is ending up with a bespoke home that you have more opportunity to add value to – depending on how strictly you manage your costs.

Developers, for example, work on the principle that the end value of the completed property is broken down into a third spent buying the land and fees, a third spent building the house, leaving a third as profit.

Other factors which may sway your decision to build rather than buy are stamp duty and VAT.

Self-builders pay stamp duty on the price of the plot, not the end value of the property, which significantly reduces the bill.

To work out how much stamp duty you will have to pay, head to Telegraph Money’s stamp duty calculator and input your information.

Homeowners can also apply for a VAT refund of 20pc on the cost of building materials purchased, and no VAT is payable to tradespeople building your home. These exemptions do not apply to those renovating an existing residential property.

Building a budget

A quantity surveyor’s list of precise costs is called a Bill of Quantities. “It’s a schedule of works taking into account all architectural, plumbing and heating, and environmental designs and drainage,” said Mr Phillips.

“From that, we draw up the costs of everything from demolition, groundworks, plumbing, painting – all the way down to the final tiling.”

Mr Phillips suggested sending your Bill of Quantities to four contractors asking them to price each individual element. Once a tender is agreed, the Bill can be converted into a contract, which means the contractor can be held accountable if the project goes over budget. He recommended using a JCT building contract for homeowners, priced at around £40.

Seven things to consider before you build a property

Before you dive headfirst into a self-build project, make sure you can answer these questions:

1. How much time do you have?

Overseeing a house build can be very time consuming, and won’t work for everyone. But the more involvement you have with the project, the more control you’ll have over the build and budget.

Peter Johns, chief executive of the NaCSBA, said: “Some people employ a professional project manager if they have the budget, but you’ll pay thousands – if not tens of thousands of pounds – depending on the size of the project. By managing it yourself you’re saving money, which can go into the value of your house.”

2. Have you done your research?

Up to 12 months ahead of getting started, hit the self-build exhibition circuit and sign up to the seminars on offer. These can be useful as you’ll get the chance to put your questions to the experts afterwards, and meet companies showcasing their wares to give you ideas on the design and build you might want to go for.

3. Can you find a plot?

You can buy land at auction, through an estate agent or by searching online databases such as Plotfinder, PlotSearch and PlotBrowser. Through the databases you can find out which agents deal with land sales in your area. You can also register your interest on the Government’s Right to Build register. Your local authority will let you know if any sites match your search.

Bear in mind that plots that are tricky to get to will increase your build cost, because builders will have to pay to store vehicles and machinery off-site. Likewise, in city locations builders will have to pay for things like parking permits and skip licences.

4. Are you likely to get planning permission?

A plot sold with planning permission is naturally more expensive than one without it. You can negotiate with the vendor to buy land subject to planning approval, but sellers rarely agreed to this.

It’s possible to employ a local planning consultant to investigate the site for you before you buy it – or ask your architect. To save money, you could also do it yourself. But be warned, the complexities of UK planning legislation trip up even the most experienced of self-builders.

5. Have you considered energy efficiency?

Building a home from scratch means you can take advantage of the latest technology to ensure your home is as energy efficient as possible – but you’ll need to plan ahead.

James Carter-Brown, of Knight Frank, said: “Self-builders must think about their energy strategy before they start the project, such as whether they want ground or air source heat pumps, solar panels or combinations of renewable energy sources.

“They will impact the price, but if we’re going to become carbon neutral and preserve the heat – and reduce overheating – in our homes we have to think differently.

“Finally, think carefully about your choice of finishes once your home is built, because this will significantly contribute to the carbon footprint of your house.”

6. Do you need mortgage finance?

Some downsizers use a short-term mortgage known as bridging finance, which is secured against their family home for between 12 to 18 months. Once the project is complete, the family home is sold to repay the bridging loan.

Mortgage finance is also available through specialist mortgage brokers, secured on the plot of land.

Alternatively, a self-build mortgage can be used to purchase land as well as pay for construction and materials, although rates are usually 1pc to 2pc higher than average mortgae rates. Money is released in stages as the project progresses. Mortgage rates range from 5.6pc to 8pc, and fees range from £999 to £2,000 according to brokers BuildStore.

You can work out your mortgage costs using our mortgage cost calculator.

7. Does your budget include VAT?

When you’re drawing up a budget, keep in mind that quotes for professional services, such as an architect, will be given minus VAT, so you’ll have to add that on yourself when calculating your budget. You cannot claim this VAT back.

You can apply for a VAT refund on the majority of building materials, so keep all your invoices and receipts. You can only apply once for a refund under the DIY Housebuilders Scheme and this must be done within three months of the work being completed.

FAQs

What are the biggest hidden factors of building a house in the UK?

Some of the most frequently reported hidden costs when building a house in the UK include site preparation, VAT on professional services and utility installation. In addition, it is recommended to have a contingency fund in case there are any unexpected issues during the project build. This is recommended to be anywhere between 5 and 15pc of the total project cost.

Do I need planning permission to build my own house?

Yes, you must seek planning permission before work on building your house commences. Some people may buy land and discover that their planning permission application is rejected so it is often worth employing a professional planning consultant or architect before purchasing a plot to consult on this critical factor.

Is it cheaper to build or buy a house in the UK?

In certain cases, building your own house can be more cost-efficient than buying one, especially if you manage the project carefully and qualify for VAT refunds via the DIY Housebuilders Refund Scheme. However, there is more financial risk involved when building a house, especially if you are inexperienced and unforeseen costs arise.