How can I finance a small extension and then keep it on budget?
Property Clinic: Your property queries answered
The old saying ‘draw four times, build once’ is very true and wise. Photograph: iStock
I’m exploring the idea of building an extension and renovating my house. The size of the extension should not involve planning permission. Do you have any tips on the best ways to raise finance and the common obstacles to doing so? Also, any suggestions on the best ways to keep the project on budget?
I’m going to give you a politician’s answer and only half answer your question. As far as I understand it, the banks are lending again. If you cannot get a mortgage from a commercial lender or a top-up on an existing loan you could consider the credit union or you may be eligible for a loan from a local authority. Here are some good pointers before meeting with your financial institution: Have a drawing completed of the proposed extension and obtain three quotes from your local builders. Engage a surveyor to present this information in the format required by your financial institution. Typically, they will require verification that the works can be done for the figure quoted, usually the lowest of the three tenders.
They will require verification from your architect, engineer or chartered building surveyor that the works will be supervised through all stages, confirmation on the position with regard to planning permission and certification as to compliance with Building and Planning Regulations on completion of the build. They will also require details of the professional’s professional indemnity insurance.
In terms of keeping to your budget, it would be prudent to sign a contract with the builder. The Royal Institute of the Architects of Ireland (RIAI) has a Short Form of Contract (SF88), a simple contract suitable for most extensions. Agree a stage payment schedule with your builder in line with the drawdown schedule agreed with your bank. Have each claim/invoice vetted by your surveyor and certified as a reasonable reflection of the quantity of work done at a given date.
Any extras must be fully priced by the builder and agreed in advance of execution on site. One way to avoid extras is to ensure that everyone involved is clear from the beginning what is required from the build. The old saying “draw four times, build once” is very true and wise. Get the plans right before the start. If you have a partner make sure you are both in agreement on the fine detail and avoid the builder having to price work while on site. Even the most conscientious of builders love the word “extra” when they are in the middle of a job.
If the budget is tight, consider for example profiled metal roof sheeting in lieu of slates or tiles. Slates are the most expensive option. However, if the extension is visible from the front or side of the property, this may impact on the aesthetics of the development. You could consider building by direct labour and save up to 25 per cent on the build cost. But this is not for everyone, and even if you are a project manager in the business world, that doesn’t mean you can run a building site, however small. You really need to know what you are doing or have a family member or friend from the construction sector who can project manage the build for you. Remember you may not be on good speaking terms at the end of the build.
Finishes can account for a significant amount of the project cost and savings can be made here. Choosing a cheaper floor or wall tile can net hundreds of euro savings. You could also delay the finishing of one room to a later date when you have more money or improved cash flow.
Pat McGovern is a chartered building surveyor and a member of the Society of Chartered Surveyors Ireland, scsi.ie