How much does it cost to build a house: guides and examples
ECONOMÍA Y FINANZAS I September 23, 2020
Are you thinking about buying a house? Do you know how much it costs to build a house? We have provided this guide with assumptions and examples to give you all the information possible.
Building your own home has great advantages, such as being able to decide from start to finish how you want your home to be or saving the extra cost that would be incurred by purchasing a home from a property developer, although it also has some drawbacks, such as running the risk that the initial budget will skyrocket if you do not take into account all the expenses involved in building a house. To make sure that this does not happen to you, in this guide we review all the points that you should pay attention to when building your home.
The first thing you need to build you own home is a plot to build it on. If you already own land, you will save yourself a good chunk of your budget. If you have to buy the plot, this purchase can represent a third of the total value of your future home, or even more, depending on where it is located and its buildable area (the buildable square metres -that you can build- per square metre of land).
In any case, regardless of whether you have the land already or are waiting to buy it, check with the city council to make sure it is suitable for building, find out how the plot is classified and what urban regulations apply (for example, the height you can build to or the setbacks required). Also check the accessibility of the land, whether it has all the services (water, electricity, sanitation facilities, etc.) and its characteristics (whether there are easements, power lines, water courses, etc.), as well as its inclination, orientation and sunlight (the sun it receives at different times of the year).
You also need to go to the Property Registry to check the ownership of the land and whether there are charges or easements on the property, asking for a land registry report, and to the Cadastre, to verify that the surface area registered in the deeds coincides with the surface area registered there.
If everything is correct and you have decided to buy, you must add the following to the price of the plot:
If you need it to draw up the sale contract, also add the expense of an agency or lawyer (around 300 euros).
Before you can build, you must carry out a topographic survey and geotechnical study that details the characteristics of the land where the property will be built, which is necessary for a correct foundation and to be able to prepare the building project. The geotechnical study must be prepared by a specialised technician and endorsed by their professional association. This costs around 800 to 1,200 euros.
Depending on what type of house you are going to build: modern, classic, one or two storeys, wood..., the material you choose for the structure (the foundation, the framework of beams, the pillars, the floors, etc.) will be different and this will influence the final price. The most commonly used building materials are:
Another element that will determine the price of building a house is the square metres it will have. The price per square metre will decrease the larger the house, but, of course, the more metres, the more you will have to invest. An architect is the person who can best advise you on the size that your future home needs to have, depending on your tastes, the size of your family and the uses that you are going to give the house (if you need a larger garage or have an office at home, for example).
In fact, it will be the architect who will prepare the material execution budget (MEB), in which all the costs involved in executing each of the items that appear in the project measurements are computed: earthworks, concrete and structure, masonry, roofing, flooring and tiling, plumbing and electrical installations, among others. These prices are calculated by multiplying the measurement by the price of each building unit. It also includes labour costs.
This budget is variable, since it will be influenced by factors such as the surface area of the house, the quality of the materials that are going to be used, the complexity of the construction (for example, if the land is not flat, but is on a slope, the house will cost more). An approximate value of the material execution budget of a single-family home would be between € 650 and € 900/metre2 built.
The material execution budget (MEB) is just one of the parts of the contract's budget, which is the price you will pay a construction company to build the house. This contract budget includes the material execution budget plus the general labour costs (which is usually 13% of the MEB) and the builder's profit (6% of the MEB).
We recommend showing the project that the architect has prepared (the plans and measurements) to several construction companies to request a quote. You can also contract the building work in parts, although in this case you will need to be more aware of coordinating the different works so that it does not take too long.
Once you have picked the builder, the forms of payment, guarantees and execution deadlines are specified in the work contract. You will normally have to pay the builder monthly payments proportional to the work carried out, and retain between 3 and 10% of the total cost to pay once you have received the house.
To calculate the total budget you will have to add to the contract budget other expenses generated by the construction of a house, such as the technical fees of the architect, surveyor and other technicians, municipal rates and taxes, plus VAT for each concept.
In detail, architect fees usually represent between 8 and 15% of the house's material execution budget, while the technical architect usually charges 30% of the architect's fees, and the site health and safety coordinator, 30% of the surveyor's fees.
As for municipal fees and taxes, if you build your own house you will have to pay the major building license at the corresponding town hall. This rate varies according to municipalities, ranging between 4% and 6% of the work budget.
You will also have to pay the Buildings, Installations and Works Tax (ICIO), (maximum of 4%), which will accrue at the time of starting construction.
Regarding VAT, 21% is applied to professional fees, while 10% is paid in the contract budget.
At the end of the construction, the house will need a general clean before you move in to remove dust, remains of cement, plaster, paint, silicone, etc. A company specialised in end-of-work cleaning will charge you between 15 and 20 euros per hour and person. The final price will depend on the size of the house.
Another cost that you have to include in the budget to build a house is that of the deeds. When the building is finished, you will have to request a new construction deed, which is a document that is formalised before a notary public attesting that the house has been completed. The cost depends on the declared value of the house (we are talking of around 1.5%) and on the number of pages in the deed. Calculate around 700-1,000 euros.
To get the title deed for a recently completed building, you will have to go to the notary with the following documentation:
Once the title deed has been drawn up, you much register the house in the Property Register and the Cadastre. The registrar's fees (also fixed by the State) are around 0.5% of the value stated in the title deed. Finally, you must pay the Stamp Tax, which will represent another percentage of the value of the house (between 0.5% and 2% depending on the autonomous communities).
You also need to add to the overall budget the costs of connecting supplies to the house:
Prices depending on the type of construction
Depending on the type of construction chosen, you may need a budget. These are some of the most common constructions and their characteristics.
Construction of pre-fabricated houses
Building a pre-fabricated house is becoming increasingly popular for two main reasons: its lower cost and speed at the time of building the property. With this constructive option, the components of the house are pre-built in a factory, creating modules that will then be transported to the chosen plot where they will be assembled and the construction completed. In this way, the construction process is shortened, and the house can be completed in a matter of months, compared to the traditional process that usually takes around a year or a year and a half.
These prefabricated houses require a foundation on the site and all the permits and administrative procedures, just as if we were building a traditional house.
Consulting companies specialised in the construction of prefabricated houses, the price can be between € 770 and € 870 / m2.
Construction of modern architecture houses
Some people, however, opt to build a modern house, with a cutting-edge design and in construction systems. Glazed façades, flat roofs, use of home automation, open interior spaces and high ceilings are some of the ideas that come to mind when thinking of a modern house.
The qualities chosen and the choice of the architect are factors that will influence the final price, but a modern house does not have to be more expensive. What's more, if it is designed to be energy efficient, it will save you on energy when you live in it.
Construction of environmentally friendly houses
There are an increasing number of people who prefer to build environmentally friendly houses. These buildings are those in which sustainable, natural or recycled materials are used, free of toxins and locally sourced. An ecological design also takes into account energy efficiency, ensuring that the home has good insulation, good orientation and good ventilation that minimise the use of heating and air conditioning.
A priori, building an environmentally friendly home can raise the budget, although the higher initial expense will be quickly amortised thanks to the lower energy consumption.
Construction of wooden houses
Wooden houses are gaining followers among those who want to build their own house, as wood is an abundant, sustainable, light, insulating, resistant and versatile material. Wood-frame houses are common in the United States Canada and Nordic countries, and now they have begun to interest Spanish owners.
Their higher cost compared to a traditional brick and mortar house is offset by shorter construction times (as the wooden structures are prefabricated in the workshop and assembled “dry”) and their greater energy efficiency.
If you need to finance the construction of your house, you can take out a specific self-build mortgage. In this case, the amount that the bank can lend you is calculated based on the final value of the home, and it will allow you to make payments for the work as construction progresses
To apply for a self-build mortgage you must already have:
You can check your options in the mortgage section of the Banco Santander website and request information if you wish on the Self Build Mortgage.
In summary, among the issues to consider when calculating the costs of building a house, it is also advisable to pay attention to the planning of the construction. These are, step by step, the different stages of building a house:
In this article we have reviewed how much it costs to build a house in Spain and all the aspects and details that you should look at throughout the construction process in the self-build mode.
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