What you need to know before building from scratch

Building a property from scratch can be more affordable than purchasing an existing home, but only if the homeowners carefully plan the build and keep a tight watch over the budget. Regional Director and CEO of ZIYANDA Real Estate, BG Nhlapo says that the key to building your own home is being well prepared before starting the project.

“Perhaps one of the biggest reasons that people opt to build their home is the fact that they can customise it to suit their preferences. It can also cost less if planned correctly. Sadly, building from scratch often costs more than initially expected. Unless properly costed for, there is the chance that the cost of the project will be greater than what you would pay to purchase an existing property with similar features,” Nhlapo warns.

To guard against this, one of the first aspects that need to be researched thoroughly is the competency of the builder. The success of a building project will be based on how competent the contractor is to complete the endeavour within the allotted period. If the property is not finished within the expected time frame, it can have some harsh financial implications. Not only will homeowners have to fit the bill for extra labour costs for every hour that the build goes over, but they will also need to pay for their temporary housing.

“During the build, homeowners will require accommodation until the property is completed to a habitable extent. Either this means staying with friends or family, which is cost-effective but sometimes inconvenient or incurring the cost of renting a home while you wait. This can become costly considering that the land and building costs of the new property will still need to be covered as well,” BG cautions.

Not only could a builder’s competency affect the current costs of the build, but subpar work will also cause issues down the road and will be costly to rectify at a later stage – not to mention the fact that the home will be unsafe for its occupants. Only choose a builder that is certified by the National Home Builders Registration Council (NHBRC). NHBRC aims to reduce the risk of sub-standard building work as much as possible and ensures that only qualified, experienced contractors, are used to build homes. If the build is being financed, most banks will also insist that the builder is a registered member of the NHBRC before releasing the necessary money.

As a final consideration, BG warns that if a bank is financing a building project, the homeowner will be required to provide several documents such as the building plans, which should include a schedule of finishes to determine the property’s market-related value once it is complete.

These documents will be used to determine the size of the loan granted within the parameters of the bank’s credit policy. “Due to the higher risk involved with building a home, the deposit required to finance the build of a home will also usually be higher than the deposit required on purchasing a pre-built home,” Nhlapo mentions.

Once all the above factors have been properly planned and budget for, building a home can be a fantastic way for homeowners to create a custom home that is tailored to their needs – just avoid getting too personalised to ensure the future marketability of the home. “Homeowners should consult a real estate professional to find out what the resale value of the completed build could be. Real estate professionals can also provide insights into what designs will increase or decrease the appeal of the home, which could have a profound impact on the home’s final value,” BG concludes.