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Want to Make a Big Profit on your Self-Build project? Best Towns Revealed

A developer has revealed the top 20 London commuter towns where self-builders can turn a profit- provided you have a couple of million pounds ready to turn your designs into reality.

Esher and Weybridge in Surrey and Harpenden in Hertfordshire headed a list of 20 locations identified as the most profitable places to self-build, as they offered the largest return on the original investment, which can potentially reach up to 40 percent.

Developer Searchfield Homes carried out the research, which only included locations within an hour of central London by underground or train. It determined where self-builders would make the best return on investment, adding that in these towns it would probably mean acquiring a plot with an existing property and then removing it to build a newer and larger home.

In Harpenden, an enterprising self-builder would have to spend around £2million to deliver a house worth £2.8million. Those with the means to undertake such a project should also be prepared to encounter resistance from neighbours.

The figures took several factors into account, including the price of the land, stamp duty charges, and the market value of the new property.

The plots used in the calculations had initial purchase prices that frequently ran into seven-figure territory due to higher property prices in and around London.

 

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Even Maidenhead, which was the least expensive site for these lucrative projects, would cost at least £1.5million up front.

The Searchfield Homes research included tips that residents of the recommended towns could find offensive. It recommended knocking down existing homes, preferable 1930s buildings with big gardens. This approach could significantly change the character of communities known for their period architecture.

Another tip was applying for permission to build the biggest house possible on the plot.

According to the research, Harpenden self-builders could realise a return of close to 40 percent on the initial investment. This figure is based on the £2million of an average detached plot and build, which includes stamp duty fees and a 3.5 percent mortgage interest over a two-year period.

Using figures taken from property website Zoopla, the research concluded that constructing a house that is twice as large as the original would result in a £2.8million property.

Searchfield Homes explained that to finance the build, it was essential to choose locations that produce the highest return on investment. The majority of lenders limit the loan amount to 60 percent of the valuation and include a stipulation that it does not surpass 90 percent of the land and build cost.

Searchfield Homes managing director Andrew Searchfield said that if the project creates losses, financing will be impossible without a considerable amount of equity. He added that while the research have an indication of return on investment, self-builders needed to accept that some local authorities would be more open than others, and areas with replacement dwelling precedents stand a better chance of being accepted in planning.

 

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