Build your own House

Build your own home, according to your needs, to your needs, satisfying all your tastes. It is a dream for many citizens and, apparently, very few reaches. However, with the crisis, the collapse of the construction or the bankruptcy of many promoters, more and more families and individuals have opted for self-promotion to be able to access a home at cost price to avoid the extra cost involved Buy directly from a promoter.

The numbers speak for themselves. In 2013, of the total number of new construction homes that were built in Spain, more than half – 59% – were developed under self-promotion. Seven years ago, in 2006, that percentage only represented 14% of the total.

Apart from the cooperatives, some citizens have taken advantage of owning a plot of land to build their house. However, the majority has bought the land taking advantage of the strong fall experienced by the soil in these years of crisis -nearly 50% from maximums-, according to the latest data from the Ministry of Public Works.

Despite this important impulse, building your own home is not an easy task and a failure to calculate the budget can be devastating. You have to be very clear about the costs of building your own home. It is convenient to take the calculator so that the accounts can be squared.

First, you must know that the bulk of the budget – approximately 80% – goes to buy the site and execute the works. However, there are many other expenses that are not usually taken into account and that can be more than annoying. We talk about taxes, technical fees, municipal licenses, actions after the work, financing.

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The most important expense, the purchase of the plot

Broadly speaking, only the purchase of the land can get to eat between 40% and 50% of our budget. “In the 1980s, there was the talk of the ‘law of the third.’ One third of the budget was for the purchase of land, one third corresponded to construction costs and another was the profit margin of the developer . of the market, the land came to represent between 60% and 80% of the final price of a house “, they explain to  El Confidential  from MBQ Group, a business group dedicated to the integrated management of the real estate activity.

Nowadays, the sharp fall in prices has moderated these percentages. Even so, it is still a very important item within the budget. “The finalist floor, suitable for building, is very scarce and due to its shortage is still very expensive. It is the main expense faced by those who want to build their own home, “added MBQ Group. “It usually represents between 40% and 50% of the final price of the house even in those cases where a large discount is obtained.” Percentages that coincide with those handled by the cooperative manager Ibosa, which also figures average, in 40% of this item, and a percentage that hardly differs with those handled by the promoters -between 40% and 50%, according to Ibosa.

On the other hand, buying a lot is not an easy task. As when looking for a home, it is convenient to carry out a sweep of the market to get an idea of the prices in a certain area. Once the site is chosen, the most important thing before buying is to go to the corresponding Town Hall and verify that in the plot that can be built and how much can be built -surface and heights-.

According to the ‘Basic Guide for self-promotion and construction’  of JBS Gestión, before disbursing a euro it is advisable to check if there are charges on the deeds of the lot requesting a simple note in the corresponding Property Registry. It is also necessary to verify the ownership of the land, as well as the surface that the scriptures reflect, is the same as the one registered in the Cadastre.

It is also important that the site has access by public paved road and have urban services for drinking water supply, wastewater evacuation to the sanitation network, electricity supply, street lighting …

At the price of the site, it is necessary to add, as in the purchase and sale of a second-hand dwelling, the expenses derived from the deed of sale of the site: fees of the notary and the registrar that are usually around 0.5% of the purchase price . In addition to the Transfer Tax (ITP), between 7% and 9%, depending on the Autonomous Community and as long as the seller is a private individual. If it is a company, you will have to pay 21% VAT. Without forgetting the tax of Documented Legal Acts (AJD).

“The tax regime is very unfavorable for individuals.If you buy from another individual, you pay less than 10% in taxes, whereas if you buy the site from a company you must pay 21% VAT and without the possibility of deducting tax, unlike what promoters can do “, they explain from MBQ Group.

These taxes will also have to be added to the VAT that is applied to self-promotion works and that is approximately 10% of the contract budget, that is, the budget of the construction company. The VAT that is applied to the technical fees -architects, builder …- is 21%.

“If you want to favor access to housing, the best way is self-promotion because people can access it at cost, but fiscally it is very penalized.” Construction taxes have risen in these years of crisis, canceling the fall in prices, “they say in MBQ Group.

Construction of the house

The second most important item that we have to take into account when preparing our budget is the material execution of the works that ‘eats’ approximately another 40% of the expense. In this section, we must also consider the builder’s fees and benefits and some taxes such as those imposed on his fees.

An approximate value that can serve as a reference are the 750-900 euros that costs the square meter built housing . A value that corresponds to the cost of building a single-family house of about 200-250 square meters with qualities and average finishes. “It is very common to exceed this price in the construction of a house of self-promotion since the autopromotor tends to choose higher qualities”, point from the study Amutio and Bernal Architects, in whose blog they detail all the expenses that a self-mover should assume  and that They coincide with the figures they manage from MBQ Group, a company that facilitates all these procedures to those who want to build their own home by offering an integral service of real estate self-promotion.

Before starting to build a topographic study (250-400 euros) and a geotechnical study (650-800 euros)  in order to build the good foundation of the house and necessary to develop the building project. It is at this point when you have to commission the basic building project from an architect  who obviously charges a fee for his services.where the charges at times are very high and  provides you these services at very cheap rates all across the nation. This expense is usually around  4-6% of the budget of material execution , according to the estimates of Amutio and Bernal Architects.

Once the project has been approved, before starting to build, the works license must be requested from the corresponding Town Hall , at the expense of these procedures. It is necessary to request the provisional connection of the electric current and the water supply of the work  and commission the project for the execution of the work , normally to the same architect who has drafted the basic project. It is also necessary to commission the work management – an architect – and the direction of the material execution to a technical architect.

“The fees of these professionals depend on the complexity and surface of the house and tend to be around, each, 2-3% of the budget of material execution”, point from the architecture studio. Without forgetting that the VAT applicable to technical fees is 21% since, in the case of self-promotion, a reduced rate does not apply.

Also, we need a  construction company to execute the works. Experts advise asking for several quotes and signing a contract at a fixed price. The contract budget is usually 19% higher than the budget for the material execution of the works “since it includes general expenses (13%) and the builder’s benefit (6%),” Amutio and Bernal Architects point out. “It is convenient to consult several construction companies, since you can get to find price differences of 50% between contracted budgets for the same project,” they advise.

Another additional expense, the mortgage

The calculator keeps adding up if the autopromotor needs financing. The mortgage offer is scarce and more expensive than buying a traditional home. Expenses derived from the mortgage : appraisal, notary and registry, AJD, opening commission and bank interest.

In addition, the individual does not have all the money of the loan immediately but the bank will provide certain amounts as the construction of the house progresses and the work certifications are presented. With the crisis has also closed the tap for these types of products and the bank performs a very thorough study of the customer. At present, only three of the 10 largest Spanish financial institutions offer a mortgage for self-promotion .

Municipal licenses, another added

Before starting to build, the building permit of the City Council is necessary , as well as a safety and health plan. In addition, the start of the works must be reported to the competent authority. The contracting of civil liability insurance for all construction risks and ten-year property damage insurance is mandatory . Not forgetting the contracts with a technical control agency and a quality control entity.

Once finished the works, the architect and the technical architect will have to sign a certificate of end of work  and once visa can apply for the license of the first occupation in the City, for which you also have to pay and without which can enter to live in the house, as well as for the issuance of the certificate of habitability, although it is usually a very small amount.

Also, you have to pay a tax on buildings, facilities and works, whose percentage varies according to the City Council and you have to deposit a deposit for management of construction and demolition waste, which is returned at the end of the works if the correct management of the waste .

More expenses once the works are finished

Although the works have finished, the autopromotor still has to face another series of expenses. For example, you must make the public deed of new work before a notary and register in the Property Registry . As in the purchase and sale of the land, the fees of the notary and the registrar must be paid, around 0.5% of the value of the home.

In addition, it is necessary to register the different supplies such as water, electricity, gas and telecommunications, the price of which depends on each company, although it may be around 200 euros per supply.

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