Group custom build FAQ

When you buy a new build home, the price of the home includes the developer’s profit, which is usually around 25% of the total cost. In our model, rather than us being the developer, we manage the project with you as our client. We will manage everything to do with building your own home from start to finish, from finding the site to doing the deal to managing the build process. We charge 10% of total project costs, saving you up to 15% on the price of your new home and giving you the benefit of choosing what you want your new house to be like.

Depending on the site you buy we would set up either a limited company, a partnership or you would hold your land in your own name.

All costs would be shared in proportion to the square footage that your home ends up being. Eg. If total cost was calculated to be £600/sq ft, and one party wanted an apartment of 1,000 sq ft, and another a house of 2,000 sq ft, it would cost £600,000 and £1.2m respectively.

Your choice is unlimited subject to planning and building regulations, and of course cost and budget.
We would be aiming to have the same or similar spec for everyone, so that costs could be evenly shared.
If individuals in the group wanted different specifications, we could build everything to ‘warm shell’ – where you have the same watertight structure, windows, doors, roof, insulation, wiring, plumbing, and heating, but you choose all of your own fixtures and fittings.

STAGE 1 – evaluating the site
1) If we have definite interest from 2 or 3 parties, we will arrange a virtual meeting to share more details and answer any questions, and schedule a collective viewing with the agent.
2) If there is still interest, we would contact an architect to draw up some sketches based broadly on the amount of space that everyone wants, working around the constraints of the site and the design.
3) After that, we would be able to work out a more detailed budget.

STAGE 2 – bidding on the site.
At this point, you need to decide whether you want to join the group and bid on the site. You will need to accurately assess your current finances and specifically how much you can access in cash terms to buy the site.
1) 10% Deposit of land value (on exchange) – timing wise we’d expect this to be 2 months away from any bid – but it could easily be longer (it’s sometimes taken a year to buy something due to protracted negotiations – but that was with a public body and they are very slow!)
2) 90% Completion of land purchase – we’ll call this the completion money – timing wise we’d expect this to be about 1 month after exchange.
3) We would expect either the group collectively or each individual to be able to borrow the construction finance (and we can help with this if required)

STAGE 3 – buying the site
We are successful in our bid! We then go into legal due diligence and negotiation (if applicable). This involves having a lawyer do searches, doing ground investigations (for any foundations and ground work required), ecology (ex. one of our sites had Great-crested newts that needed to be trapped and relocated), possible drainage and flood surveys, and any other archaeological surveys required by the local authority.

STAGE 4 – detailing design & applying for planning
The chosen architect will draw up a detailed scheme which will then be sent off for pre-application advice, to understand the likelihood of getting permission for the scheme submitted. The council might impose conditions on potential problems such as noise and traffic.
If the council requests changes to the design, then there would be more work to the done to the scheme before it is re-submitted for planning.

STAGE 5 – go to tender
The architect or a quality surveyor will help put together the tender package, and they will also advise on the type of structure that should be used. Soil investigations will need to be undertaken before tender, and we would employ an engineer to design the structure of the house.
We would also have to deal with scaffold licenses, highways, party walls, and any infrastructure asset protection necessary.

STAGE 6 – start building
We will set up a programme and find and hire builders, contractors, and any other professionals necessary for the build. Then, if we are building the home up to a warm shell, you will take over and do the fit out on your own.
This will involve doing a first fix (installing your drains, pipes and wires), then a second fix (installing your bathroom, kitchen, sockets, switch plates, ironmongery, connecting gas, electrics, and water adding floors and plasterboarding up the walls and ceilings). Then come the final steps of the fit out (painting the walls, finishing woodwork, and landscaping).
You will reach practical completion once everything is OK and signed off, where the QS will issue you a certificate. Then comes the initial snagging, and then 12 months’ snagging to fix any cracks in the plaster as the building dries and settles.

Depending on everyone’s circumstances there are a few possible scenarios:
1) Everyone wants in and has the completion money – great – we work up a scheme in more detail, do some due diligence, and put a bid in. If we’re successful we would enter into legal due diligence stage (both from a set-up perspective and a purchase perspective).
2) Everyone wants in, but not everyone has the completion money straight away (i.e. they can’t get it in time) – we can look at potential other funding sources on behalf of the group to see if we can find some lenders OR we might decide to make a bid subject to planning – which effectively gets us more time, reduces our risk, but will increase the cost (we’d have to offer much more for the building than people who will pay straight away). If the owner gets an ‘unconditional’ bid – they will likely go for that – so it reduces our competitiveness.
3) Some people want in – we would market the opportunity to more people and see if we can find others to join the group. We can, in the meantime, decide to bid subject to planning to buy time – but we’d need to have enough money to exchange on the building
4) No-one wants in and we let the opportunity pass

You would be providing and arranging your own finance, although if necessary we can help you find finance as well. Generally this will mean that you will need to have some cash up front (the more you have, the less we have to raise and the cheaper the build). This cash could come from a number of sources:

  1. Your bank account / savings
  2. A remortgage of your current property (or another property that you own) to release some equity
  3. A personal loan from either a bank, a friend or family either secured on an asset or unsecured
  4. A director’s loan from your own company
  5. Sale of another asset (most easily shares as they are most liquid) – but in theory it could be anything

If this is not possible, we can go to our network and try and borrow the money from private investors on your behalf.

There are some costs associated with bidding, for example if we needed an architect to design something, then we would have to pay that fee.
If the bid is successful, there would be legal fees.
If we won the bid, then we would have to pay 10% of what we bid, split between the interested parties.
The rest of the 90% would be due on completion.
Once we’ve bought the site, we would pay for professionals and planning fees up to tender stage. Once we have a definite costed budget, we can fund the build using debt from banks or other lenders.

We would expect to take 12 months to get planning, which allows for an initial scheme and a pre-app to the council which normally takes 3-4 months and then a follow up scheme which hopefully gets approval.
Once we get planning, drawing up a detailed design package of what we are going to build would take 9-12 months. This ensures that it’s all been done well and properly, so when we go to tender, we have all of the consultants on board and know exactly where everything goes.
Construction itself would take another 12-14 months, but it depends on different factors. If we can re-use any existing structure, then planning as well as construction is easier and quicker.

So from beginning to end, the whole project could take around 3 years.

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