Buying the site

Before you can commence building you need to own the site. This is probably obvious! Building on land you do not own would not be sensible. A vendor will either sell a site subject to planning permission or “as is” where you pay your money and take your chances. If the vendor agrees to sell a site subject to planning permission it means you can apply for the permission and complete the transaction after. This is obviously less risky than just buying a site and hoping for the best. No matter which option you choose the early involvement of an engineer or planning consultant is essential.

Getting planning is a reasonably lengthy process. It takes 12 weeks for an uncontested grant to issue where there are no delays, objections, requests for further information or other complications. If a third party objector appeals to An Bord Pleanala then 6-12 months is a more realistic timeframe.

Do bear in mind that at present Stamp Duty on sites is 7.5%, but at the time of writing you can get a refund once you start building so that the effective rate is 2%.

Also practical and legal issues must be considered. For instance is it impacted by wayleaves or rights of way. A house like the one below is likely unmarketable because it was built on a right of way to access a neighbouring property (in yellow)!

Mortgage and Stage Payments

If you haven’t fallen out with your broker, bank, engineer, builder, solicitor or all of them by the time the stage payment process has concluded you will be doing well.

In order to protect its position, the bank will only release funds for a new “one off” build in stages or tranches. These are each individually requested by the builder and signed off by the engineer. The reason for them is that the Bank will want to keep the “loan to value” ratio in order at each step, while the builder will expect payment as it proceeds so as to protect itself.

There is often a 4 to 6 week delay in the time between funds are requested by the builder and actually available to be paid out. This can often cause frayed tempers. The best way to avoid problems is by carefully agreeing the stage payments at the outset with all parties and making sure the request is submitted to the bank in ample time.

Retaining a Builder

Your engineer/architect will advise on the steps in retaining a builder. It is important that time is spent on preparing a detailed “Request for Tender” (RfT) document as this will form the basis of any subsequent contract. Review each tender received carefully and with suspicion! Assume the worst if any specifications or details are omitted. Review any deviations from the RfT carefully.

Before commencing work a builder should furnish you with a building agreement. This will generally replicate the tender, the agreed stage payment schedule, the drawings, specifications, and ideally any other extras, assumptions or price cost sums (PC Sums). PC Sums will be used as assumptions for items such as flooring, bathroom ware and kitchens, but be careful as the actual cost of these can far outstrip the sums allowed for in the building agreement …you will be paying the balance!