IT MIGHT be the influence of programmes such as Grand Designs, or the chronic lack of supply, or simply the high cost of moving. Whatever the reason, the luxury end of the self-build market is growing. More and more of the Waitrose generation (who might be called well-off eco-worriers) are looking for a plot for their dream home.

Building a home typically costs 20-30 per cent less than buying it ready-built, which becomes a premium once your house is finished. Sometimes the added value is even higher: Warwick Raymen, who runs a glazing firm, bought 12 acres in Croydon, Cambridgeshire, to build an eco-friendly farmhouse. The land cost £590,000 and the build is about £300,000, but the house is likely to be worth at least £1.25 million - 40 per cent more than it all cost.

You also pay less tax. Buy a home and you pay stamp duty on its value: build one and you pay duty only on the value of the land, provided that land is worth more than £125,000: if it is not, you pay nothing. You can also reclaim the VAT on building materials.

For affluent self-builders, however, cost is not the key factor. According to Calum Kerr, head of the self-build division at Savills Private Finance: “People want the right location and control over the design, construction and specification.” In Raymen's case, that is an environmentally friendly family home. “The farmhouse will be insulated to the hilt, it'll be energyefficient and high-tech. An acre of the land is given over to forestry, so I hope to have a wood burner to heat the property,” he says.

Being able to choose the perfect location is another advantage, especially around London. “Purchase and knock down - where a builder buys an existing property with the intention of knocking it down and starting again - is increasingly popular because there is such a shortage of premium sites,” Kerr says.

If this doesn't sound very eco-friendly, an alternative is commercial or light industrial sites. “Usually the kind of plots you find in London are commercial buildings, garages and builders' yards,” says Simon Pritchard-Smith, of Robert Bailey, a firm of property finders. “A row of garages behind Eaton Square in Belgravia recently sold for £25 million. But it is rare to find anything in the centre. You will find pockets of commercial land in residential areas. The difficulty is that you have to deal with planners to get a change of use.”

A good place to look for a plot is PlotSearch, a website run by BuildStore, the self-build specialist: an annual subscription costs £39. Some estate agencies specialise in plots of land, or you can use property search companies such as Robert Bailey. As Pritchard-Smith explains: “We charge 1.5 to 2 per cent of the purchase price, although if we find something within a few weeks then we would charge 1 per cent.”

Self-build mortgages differ from standard loans in that the money is released in stages. The amount you can borrow is related to the current value of the property, not its completed value, so the lender will usually come out to value the property at each stage of the build.

With expensive homes, financing is harder. “On an average-sized loan of £200,000 you get quite a smooth structure of costs,” Kerr explains. “With larger projects, there are two areas where costs are significantly higher: at the foundation stage and at the completion stage.”

The market for self-build loans is limited. “There are a few high-street players, plus building societies like Newcastle and Norwich & Peterborough who concentrate on their own region,” Kerr says. “Many high-net-worth clients will have a relationship with their bank. However, because those banks will not be offering a bespoke self-build product, the charging structure will be higher.”

If you are new to self-build, BuildStore may be your best option. Ray Boulger, of Charcol, the mortgage broker, says: “BuildStore can project-manage for you. Mortgage lenders trust them, so you will not need a re-inspection by the lender each time you draw down a new tranche of financing.” Re-inspections are not expensive, but you do need the same surveyor to carry out each inspection, so there may be delays if the surveyor is not available.

FACTFILE

PlotSearch, which is owned by BuildStore, is the most comprehensive land database and a good place to start looking for a plot. Also try local estate agents, scour auction lists for details of plots, or hire a property finder.

The average cost of a self-build project in the UK is about £220,000.

More than 20,000 homes in the UK will be self-built this year.

Self-build costs vary hugely. For fairly basic projects, costs start at about £50 per sq ft.

Savills expects the self-build and renovation market to double in size over the next five years.

Contacts: charcol.co.uk ; buildstore.co.uk ; spf.co.uk ; robertbaileyproperty.com

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