04 September 2011
Posted in Property Info

Ever thought of building your very own property in the area around Golf del Sur or Amarilla Golf? Or better still a property in a more rural area of Costa San Miguel? Instead of buying one, for those brave enough to take on the challenge, building your own home can be a financial winner. If you cut out developers and throw your energy at a building project, there is the prospect of getting a bigger and better home for your investment.

As a general rule, the cost of a new home is apportioned into three parts, one is the land, one part is the actual construction and the last part is the developer's profit. If you can purchase a building plot at the right price (urbanized rural plots tend to be cheaper) and cut down on development costs by doing a lot more yourself, you can stretch your money further. The average building plot price has dipped by more than 30% in the last three years, according to reports from the College of Architects, and recently we have seen that some banks are willing to give mortgages to people with all the correct planning permission and architectural plans.

Since the recession started the availability of plots has increased and there are now a large number that are ready for construction, having already got water and electricity available at the plot. There are also a number of plots available where construction has been started. But due to the tough economic climate, they have been static through the recession and the housing slump and these can be purchased with planning permission already in place (another substantial saving).

The idea of building their own property appeals to a lot of people, but then they look at all the work and the commitment that is involved and it does put a lot of them off. However with some careful planning you can use private builders to lay foundations and build the shell and roof, leaving you to complete the project at your leisure during evenings, weekends and holidays.

Some two years ago a plot was purchased and a three bedroom villa plus swimming pool was built. The total cost including project and building was approximately 330,000 Euros. The value of this Golf del Sur property has been put at 575,000 Euros giving the owners equity in the property of some 245,000 Euros. However profits from a self build property are not guaranteed. So you must take into consideration all aspects of building the right kind of property on the right plot at the right price carefully and then set realistic budgets to be successful.

Mortgages for Self Build Properties in Tenerife

You must involve the lending bank right from the start, showing plans and building permission. Then you will need to show your design and costings before the bank concerned will even entertain giving you a mortgage. Banks tend to release the money for a self-build in separate stages. Each stage has to be inspected and signed off not only by the Bank but also the architect involved. Having taken the project from foundations to the finished article you will then get a final sign off from the architect and the local Town Hall.

Tax Planning for your New Build Property

Some people make a living from building properties using their own ideas and skills to create a home. They build a property, live in it for a while and then sell it on, using the profits to build another new property.

Done properly there can be a 30 to 40 per cent gain on the sale and provided it is classed as your main home and you keep it for 3 years the profit from any sale will be tax-free, however this must be re-invested within 2years or you will be liable for 18% capital gains tax. The other stipulation is that you must be a resident.

Insurance for your Property Project

As thefts are quite common on building sites you will need to arrange insurance for the site and all its materials and tools along with public liability insurance to guard against any accidents or injuries to workers or visitors. Insurance will also need to cover damage to the constructed or part constructed building. As an idea it may well be advantageous to build the garage first thereby giving you a secure lock up for all materials and machinery. Insurance can be quite hefty during the building stage so it pays to shop around for the best deal.

Conclusion For Building your own Property

Building your own Golf del Sur property, Amarilla Golf property or rural property really does make sense. However the biggest problem is finding a fairly priced suitable plot that has not already been snapped up by entrepreneurs or developers in the know. If you can find one, you should get a small independent local builder to help do most of the main structural work. Another option is to buy a really run down property at a reasonable price, demolish it and rebuild. The overall costs could amount to more but it can still be a very good deal, if you can buy cheap enough. If you do manage to get work started on a good plot you'll have some really hard work and worry in front of you but ultimately you will have a tidy profit the end of it all.

This post was provided by the property experts from Homes and Away who have been working for over a decade with clients in the Golf del Sur property market.