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Financial Benefits of Building Your Own Home

 

Cut Out Developer Profit

By cutting out the developer the profit that they would have made can now be split between the landowner and the home owner.

No Community Infrastructure Levy (CIL)

New-build houses on a multi house development are normally subject to a Community infrastructure Levy (CIL).  This could be as much as £30,000 per plot.  However, Custom Build and Self Build houses are exempt from this charge.

Low Stamp Duty

For a normal development Stamp Duty has been paid twice by the time the first homeowner moves into the house - once by the home owner and once by the developer buying the land off the landowner.  For Custom Build and self build homes there will no Stamp Duty or a very small amount to pay depending on the value of the plot.

 

* Total Indicative Savings on 300 sqm House on a 15 House Development

 

Homeowner Stamp Duty Saving

Developer Land Purchase Stamp Duty Saving

CIL SavingTotal Saving
£27,500 £18,250 £25,000 £70,750

 

 


Custom Build - Stamp Duty and CIL Savings

 

The tax savings on building your own house when compared with buying a new home are potentially very significant.  It might take a few minutes to get your head around the numbers below but it is really worth understanding the savings. 

 

When buying a new build house in the UK there are 2 forms of effective tax - Stamp Duty and CIL.  Stamp Duty is a form of Land Tax that is paid by the purchaser when they buy a house or land and CIL is paid by the developer as a contribution to local infrastructure.  However, if you custom build a house you only pay Stamp Duty on the land value (not the build cost). If you intend to live in the house yourself there is also a saving on the CIL as the Government have stated that CIL is not chargeable on Custom Built homes.  Below are several tables with indicative savings for these two Taxes.  Please note this does not constitute formal advice and all tax implications should be checked with your accountant at the time of purchase.

 


Table 1 - Indicative Savings on Stamp Duty for a Custom Builder

 

Land ValueBuild CostFinal Value

Stamp Duty

finished house

Stamp duty

custom built

Stamp Duty Saving
£80,000 £200,000 £330,000 £6,500 £0 £6,500
£120,000 £300,000 £550,000 £17,000 £0 £17,500
£150,000 £400,000 £650,000 £22,500 £500 £22,000
£250,000 £500,000 £800,000 £30,000 £2,500 £27,500
£500,000 £600,000 £1,200,000 £63,750 £15,000 £48,750
£750,000 £800,000 £2,000,000 £153,750 £27,500 £126,250

 

 

Table 2 - Indicative Savings on Stamp Duty Due to Developer Purchase of Land

 

Purchase Price

Stamp Duty

Number of UnitsStamp Duty per Unit
£1,000,000 £43,750 5 £8,750
£3,000,000 £273,750 15 £18,250
£6,000,000 £633,750 30 £21,125
£9,000,000

£993,750

45

£22,083

Table 1 above shows the cost savings in Stamp Duty due to the purchase of the house/land buy the homeowner.  

 

 

Table 2 to the left shows the additional saving due to the stamp duty paid by the developer when they purchase the land.