What does it cost to build a house?

Construction costs de a house.

Many individuals who are considering entering the world de self-promotion ask us how much it costs to build a house. It is quite common for them to be surprised to discover some associated costs that they had not considered.

A common mistake is to consider only the price de the land and the construction budget, as these are the most representative. They usually account for around 70-80% de the investment (excluding financing). The problem is that it can complicate the correct completion de the works if all the costs are not taken into account. We recommend to have an overall picture, even before the purchase de the land. In this way, decisions can be made in line with the available budget.

In the following article we will break down all the costs involved in self-promotion de housing, from finding the land to obtaining the first occupancy licence.

Expenses can be classified into six groups:

The land
The construction
Technical fees
municipal license
Management after the work
Financing

THE LAND

In the purchase de the land, the purchase price, the notary and registrar fees, and the transfer tax must be considered.

Price de the land

The price range is very wide depending on the characteristics de the land. The main aspects that influence the price de the land are:

Distance to population centers or points de interest.
Existing and planned infrastructures
Qualities de the surroundings
Morphology de the property
Urban development

To show a real example, we will compare the unit prices de land advertised on the real estate portal Idealista in the area de Cantabria in February 2014. The price range de the 85 ads found ranges from 2 €/m2 for a plot in the surroundings de Corvera de Toranzo to 890 €/m2 for a plot in the center de Laredo. As can be seen, the ranges are so high that it is essential to make a good market research before buying a plot. An indicative value de the price de a building plot in the surroundings de the main centers de Cantabria is 50-150 €/m2 de land.

Notary and registry fees

Notary and registry fees are stipulated by means de tariffs fixed by law. The sum de both is around 0.5% de the purchase price.

Transfer Tax

The rate de transfer tax depends on each Autonomous Community. In Cantabria, for the sale and purchase de land de less than €300,000, the general rate is 8% de the purchase price. In case the Tax Agency observes that the purchase price is abnormally low, it will require a complementary liquidation.

CONSTRUCTION EXPENSES

In the construction, the expenses de material execution, the expenses and prdeit de the builder and the taxes must be considered.

Material execution budget
The material execution budget is the sum de the costs de executing each de the items included in the project measurements. The range de prices is very wide, depending on the characteristics de the construction, the land and the company contracted. The main aspects that influence the construction price are:

Surface area de the house
Area de public and private urbanization
Quality de materials and finishes
Complexity de the construction
Characteristics de the terrain: geometry, geology, ease de access…
Quality de the construction company

An indicative value de the material execution budget for a single-family house is 1,000-1,250 €/m2 built housing. The final value will depend on the qualities chosen, the design de the house, the installation systems used and the complexity de the urbanization.

An expense that is usually ignored by the developer and can become representative, is the cost de urbanization de the public road. According to the Cantabria Land Law (Law 2/2001), the developer must cover all the urbanization costs necessary for the execution de the urban planning in the affected area. Other expenses to be considered are the construction supplies (water and electricity) necessary for the execution de the works. These expenses consist de the installation de the provisional connections and the payment de the corresponding consumptions. Their amount depends on the distance de the plot from the general network, the surface area de the dwelling and the construction systems used. If this expense is not included in the contract budget, it will have to be paid by the developer.

One aspect that has considerably increased the execution price de new constructions is the Technical Building Code approved in 2007. This regulation has substantially improved the quality de the building, but on the other hand it has meant an increase in the cost de execution in the order de 10-20% with respect to the previous regulation.

Expenses and prdeit de the builder

For the construction de a single-family house, it is almost essential to hire a construction company to manage all the aspects related to the execution de the works. Each company studies the plans and measurements de the project to prepare the contract budget, which is usually 19% higher than the material execution budget, since it includes general expenses (13%) and the builder’s prdeit (6%). We recommend choosing formal companies, which have not adjusted prices too much downwards, as disproportionately low budgets end up affecting the quality de the construction.

Taxes
The V.A.T. applicable to self-promotion works is 10% de the contract budget.

TECHNICAL FEES

Technical fees can be classified into three types: site surveys, design and construction management.

Site surveys

Topographical study: it is used to draw the exact geometry de the plot. Its price is usually around 300-450 € depending on the location and surface de the land.

Geotechnical study: it is used to know the characteristics de the land and to design a suitable foundation. Its price is usually around 650-800 €.

Basic and execution project

The execution project is the document that defines the entire project: geometry, construction systems, materials, etc… The architect’s fees for the drafting de the basic and execution project depend on the complexity and surface de the house, and are usually around 4-6% de the contract budget for a house de the aforementioned characteristics. If the architect has a certain prestige due to the quality de his work, it is normal for his fees to be higher than these percentages.

Construction management

The construction supervisors ensure that the work is carried out correctly and that safety measures are complied with. The construction management consists de three agents: the construction manager (architect), the execution manager (quantity surveyor) and the health and safety coordinator (usually the same quantity surveyor who manages the execution). The architect’s and quantity surveyor’s fees depend on the complexity and surface area de the house, and are usually around 2-3% each de the contract budget.

Taxes

The VAT applicable to technical fees is 21% de the fee budget. In this case, a reduced rate does not apply to self-promotion.

MUNICIPAL LICENCES

The costs related to the municipal licence are divided into two parts: the urban planning licence fee and the tax on constructions, installations and works. Each municipality establishes a tax rate for each. In addition to these costs, a deposit related to waste management must be paid, which is returned at the end de the works.

Urban development licence fee

The planning permission is used by the City Council to check that the project complies with municipal regulations. In Santander the tax rate is 2% de the material execution budget.

Tax on constructions, installations and works

Waste management bond

In order to obtain the building permit, a construction and demolition waste management deposit must be deposited. This deposit is returned at the end de the works if the correct management de the waste is accredited. The amount de the deposit depends on the autonomous communities. In Cantabria it is estimated according to the volume de waste (Decree 72/2010) and is usually around 2 €/m2 de constructed housing.

COSTS AFTER COMPLETION
After completion de the works, a series de procedures must be carried out to verify that what has been built conforms to the project, as well as to register the dwelling and register the utilities.

Deed de new construction

Once the works have been completed, the deed de new construction must be drawn up before a notary and registered in the Land Registry. As in the case de the purchase de land, the notary and land registry fees are stipulated in the form de fees fixed by law. The sum de both is around 0.5% de the value de the property.

First Occupancy Licence Fee

This is for the local council to check that the works have been carried out in accordance with the project that was submitted with the application for the licence. In the event that the final cost de the works is different from that presented in the licence application, the fee paid will be supplemented (positive or negative as appropriate).

In some municipalities there is an additional fee for issuing the licence de first occupation, the tax rate de which is around 0-1% de the material execution budget.

Certificate de occupancy

This is used by the Autonomous Community to verify compliance with the conditions de habitability de the dwelling. The fee for issuing the certificate de habitability in Cantabria is 2.51 €.

Registration de supplies

Once the work has been completed, the different utilities must be registered: water, electricity, gas and telecommunications. The cost de registration depends on the company contracted and is usually around €200 per supply. In the case de telecommunications, the supply companies usually pay for the cost de the connection.

FINANCING COSTS
If bank financing is required, mortgage costs must be taken into account:

Valuation: 300-400 €.

Notary and registry fees: around 0.5% de the mortgage liability.

Stamp duty: the tax rate depends on the Autonomous Community. In Cantabria it is 1.5% de the mortgage liability.

Arrangement fee: 0-1% de the amount de the loan.

Bank interest: depends on the mortgage subscription conditions.

To finish this article full de prices we leave you an interesting quote:

«Quality is remembered long after the price has been forgotten.»

Henry Royce. Co-Founder de Rolls-Royce

We hope you found the article helpful and we encourage you to share it. In case you are looking for an architect for your house in Cantabria, we encourage you to take a look at our website. There you can see a selection de projects we have done. If you find them interesting, do not hesitate to contact us. We will be delighted to help you.

Best regards!

MOAH Architects. Architecture and interior design studio.