From the BBC:
Homeowners should not consider it a "pie in the sky dream" to build their own property, according to the new housing minister.
Mark Prisk told mortgage lenders that self-built homes should be considered as one way to boost the UK housing market. He said that only about 10% of new UK homes were self-built, compared with 60% in France and Germany...
I don't know about France, but the widely quoted statistic that 60% of new German homes are "self-built" betrays a complete a lack of understanding of the facts or the logic behind it, which makes that particular statistic completely irrelevant to anything or anyone.
As I explained before this is historically mainly tax driven:
1. There is VAT on the construction of new housing, and if you buy the new house together with the land, there is VAT on the whole lot. But there is no VAT if you just buy land.
2. There is Stamp Duty on the purchase of land and buildings, but there is no Stamp Duty on the construction of housing on land you already own.
So it makes perfect sense to buy the bare land first (saving VAT on the land element) and then have the house built (saving Stamp Duty on the house).
Further, the houses are not "self-built" in any way, shape or form.
Having bought your bit of land, you choose a house you like from the range of standard models offered by building companies; you chalk up a square on your land and he comes round and builds it for you.
Usually, the landowner/developer of a new development fits the drainage runs, utility connections etc, chalks up the squares himself and lines up a deal with a builder to build every house in the road.
Legally, the home buyer enters into two different contracts, one to buy the land and one to have the house built, but that's about as close to "self-build" that you will get and your "self-building" might be reduced to choosing the colour of the tiles in the bathroom and kitchen and whether or not you want a connecting door between lounge and kitchen. This is why German houses are so identikit, because they are as good as pre-fabricated. (They are very well built, large and attractive compared to UK houses, just a bit pre-fab that's all).
The notion that self-build makes housing cheaper is a nonsense as well of course. If you look at that price list, you'll see that you can get a perfectly decent new detached house built for €100,000 or so, but land prices soak up the difference. Where I used to live (a nice suburb of Munich, Zone 5) the land will cost you back about €1,000 per square metre.
To sum up, Mark Prisk is a complete fucking idiot who doesn't have a clue. I suspect he's from the "They own land, give them money!" brigade, but we'll see.
Quick update
5 hours ago
17 comments:
Thanks for that Mark. I read this story about 30 minutes ago and without knowing the situation in Germany, I just knew Prisk's story must be crap.
Well, I score two out of two having built my own car and my own house (well, strictly completely rebuilt it). Can I have two subsidies please?
I don't doubt for a moment that Mark Prisk is a complete but that doesn't mean that building your own house is a bad idea - far from it.
I built my own house, finished about 4 years ago - it took about 3 years. It was one of the best things I have done in my life and I have a house I could never have afforded otherwise. Hardly anyone does every single job themselves, it just takes too long (I did the majority I layed every single brick and block, built staircases, ran wires, installed heating, etc.)
If you build it yourself there is a far greater chance of getting something you actually want and there is some tax advantage too. If you're not earning money you don't pay incometax, NI, etc and although you can reclaim VAT on most materials you can't on services such as architects, surveyors and such.
The irony though is that by far the greatest obstacles a self builder has to overcome are in the hands of the minister himself. Keeping track of the huge quantity of every changing regulations and rent-seeking bureaucracy from both the LA and utilities is a job in itself. If he were serious about encouraging self-build he could allow owner/builders to comply with regulations appropriate to them rather than a big plc. I'm not talking about the stone age, just going back to the building regs of 2000 would help a lot but then
"To sum up, Mark Prisk is a complete fucking idiot who doesn't have a clue."
Quite.
Interesting account of Germany. Here land is always VAT-free, and the building always VAT-able, so the self-built share is a bit smaller than in Germany, but higher than in the UK. The normal way of "self-building" is buying a lot from a developer/builder, and selecting one of their models. Sometimes you can choose to do a lot of work yourself. The caveat is that people who are carpenters, plumbers etc. as a profession, have to pay VAT/NI on their work-efforts in their own homes. So the way to save is to be an accountant with a bit of carpentry-knowledge. Ah, the joys of an idiot tax system!
AKH, ta.
L, do you own land? In which case the question answers itself :-)
BS, well done. As to the house itself, I'm happy to believe that if you know what you are doing you get something better, cheaper or more personally satisfying. But all that just goes into higher land values, i.e. the price you have to pay for the plot itself.
Kj, thanks for the back up, Norway sounds a lot like Germany.
Northern France seems to work like that too, except that in some areas you can buy a beautiful large rural plot for 30,000 euros. Then you select the house from an agency brochure and they come along and build it.
The concept of the french doing DIY building work is a bit of a joke.
W42, thanks for the extra info. So that's not "self-build" in the way that Buildingstoat means it either.
Of course the cost of the land depends entirely on what sort of services you will receive for free once you own it, so I'm sure there are plenty of places in Germany where you can buy a big rural plot for peanuts. You can buy UK farmland for a few thousand quid an acre, but there'll be neither utility connections nor planning permission.
W42: As I understand, rural communes in France are miniature, does planning permission in practice depend on your relationship with the mayor?
Germans are #1 in high comfort low energy homes too - Passivehaus
I will build one one day
RS, "Passivhaus" actually, no "e".
Thanks for this post, very interesting. I am a keen watched of Grand Designs and Kevin often bangs on about the German fetish for kit houses and now I understand why. Does Kevin know or does he just want us to believe in Teutonic Manufacturing Superiority?
BE
As to the house itself, I'm happy to believe that if you know what you are doing you get something better, cheaper or more personally satisfying. But all that just goes into higher land values, i.e. the price you have to pay for the plot itself.
I had a chat with a guy about buying an old run-down house recently. He is a handy guy, and had a lot of plans for the house. As for the other potential buyers, he basically said "these people will have to bring in expensive workers to fix it up, while I can do most of the work myself." So he figured that he could probably outbid the most of them. Anectodal evidence that taxes go out of rents there.
Kj, excellent anecdotal.
I think that your last sentence should say is "As the self-builder can do the work himself and save all the taxes that would have to be paid if he paid a building company to do it, the self-builder can offer most of that saving to the land seller as a higher price."
" the self-builder can offer most of that saving to the land seller as a higher price."
Well actually, he only needs to offer enough of that saving to make his price higher than the others, which, in an auction, is one bid increment, not "most of" it.
B, sure, but what if there are lots of self-builders?
But you know there aren't and there never will be, because there are only a certain number of people who have the abilities/masochistic tendencies to do that sort of thing. I would say that prety well everyone who wants and is able to take on doing up an old place/building his house from scratch is already doing it, plus far too many who should never gone anywhere near such a project. It's the stuff which divorces are made of.
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