What You Pay While the House Is Not Finished Yet

Between the first drawdown and the day you move in, a build or an off-plan purchase costs money every month and produces nothing. A breakdown of that interim period.

The interim period is the one nobody budgets for properly: the months or years between committing money to a property and being able to live in it or let it. During that window you are servicing finance on amounts drawn, paying for somewhere else to live, insuring a site or an unfinished unit, and absorbing every cost a delay adds. Build it as its own budget, because it is the part of a project most likely to run over and the part least visible in a cost plan.

What this number does and does not include

This covers the recurring costs of the period between first commitment and occupation, for a self-build or an off-plan purchase. It excludes the construction cost itself and the purchase price, and it excludes the running costs of the finished property once you are in it.

Finance cost on amounts drawn

On a staged facility you pay for what has been released, so the cost grows as the build advances. Lenders differ on whether the interim period is serviced in full, serviced on the profit element only, or capitalised, and that choice changes your monthly position substantially.

• Pushes it up: A longer programme, drawdowns taken earlier than needed, and a pricing reset against you mid-build.
• Brings it down: A tight programme, tranches drawn only when required, and a structure that defers servicing where that suits you.
• How to control it: Ask the lender exactly how the interim period is serviced and get an illustration for the planned and an extended programme.

Your current accommodation

Rent, or the cost of staying somewhere else, for the whole interim period. This is often the single largest interim cost and the one most sensitive to delay, because it continues for every month the programme slips.

• Pushes it up: Any delay, a lease you cannot extend short-term, and a move forced by a landlord mid-project.
• Brings it down: A lease aligned to a realistic completion date with a short extension option, agreed in writing.
• How to control it: Negotiate your lease around a programme with slack in it, not around the optimistic completion date.

Cover during construction

Contractor all risks cover over the works and, where relevant, cover over materials and third party liability. Lenders typically require this in place before the first release, and the cover has to run for the whole construction period including any extension.

• Pushes it up: A longer programme requiring extension of the policy, a complex build, and a site with public exposure.
• Brings it down: A realistic policy period set at the outset rather than extended repeatedly.
• How to control it: Confirm what the lender requires, who arranges it, and what an extension costs before the programme slips.

Site holding costs

Security, temporary power and water, hoarding, welfare and keeping the site safe and tidy. These run whether or not work is progressing, which makes them the quiet cost of a stalled site.

• Pushes it up: A stoppage, a dispute, or waiting for an approval with the site established but idle.
• Brings it down: A continuous programme and a contract that makes these the contractor’s responsibility.
• How to control it: Establish in the building contract who bears site holding costs during a stoppage and for what cause.

Certification and inspection visits

Each drawdown normally requires an inspection by the lender’s certifier, charged for each visit. A visit to a stage that is not actually ready is paid for and produces nothing, which makes coordination with the contractor a financial matter.

• Pushes it up: More drawdown stages, and wasted visits where a stage was not complete.
• Brings it down: Fewer, larger stages where the lender permits, and confirming readiness before requesting a visit.
• How to control it: Agree the number of stages with the lender at the outset and verify readiness with the contractor before each request.

Professional support during the build

Supervision, site inspections and any project management or quantity surveying you engage to protect yourself. It is a cost, and it is also the thing most likely to prevent a far larger one by catching a defect or a mispriced variation.

• Pushes it up: A long programme, a contractor needing close supervision, and disputes requiring documentation.
• Brings it down: A shorter programme and a well-documented contract that reduces the need for intervention.
• How to control it: Scope the supervision to the risk rather than to the budget, and keep the records it produces.

Carrying cost of money already committed

Your own equity, a reservation payment or milestone payments made to a developer are tied up and producing nothing for the whole interim period. It is not a cash cost but it is a real cost, and it is the reason a long programme is expensive even when nothing goes wrong.

• Pushes it up: Early payment of milestones, a long programme, and cash released to the project before it is needed.
• Brings it down: Paying milestones when due rather than early, and keeping uncommitted cash in your own hands.
• How to control it: Pay nothing before its trigger, and treat early payment requests as requests for a benefit you should price.

Utilities, service charges and municipal obligations

Connections, standing charges and any community or municipal obligation can begin before you occupy, particularly in a managed development where charges start at handover rather than at occupation.

• Pushes it up: A handover accepted before you can move in, and a development whose charges begin on completion.
• Brings it down: Aligning your occupation with handover so you are not paying for a unit you are not using.
• How to control it: Ask when charges start and plan occupation to follow handover closely rather than months later.

Costs that never appear on the first page

• Extending a construction insurance policy because the programme ran past its period.
• A lease extension taken at short notice because completion slipped, usually on the landlord’s terms.
• Storage for furniture bought in anticipation of a completion date that moved.
• Repeated certifier visits to stages that were not ready when the inspection was requested.
• Refreshing documents in the lender’s file that expired during a long programme.
• A second valuation at completion where the original report has aged beyond the lender’s reliance period.

Keeping the budget honest

Build the interim budget for a programme materially longer than the one you have been promised, because this is the budget that absorbs every delay in the project. Keep it separate from the construction cost so that an overrun in one does not quietly consume the other, and decide in advance where the money for additional interim months would come from. Prices, premiums and lender practices in this area change, so confirm each line with the relevant provider at the time you commit.

• At facility offer stage, with the servicing basis for the interim period confirmed in writing.
• When your current lease is signed or renewed, against a programme that includes slack.
• At each drawdown, with the interim cost to date compared against the budget.
• Whenever the programme slips, recalculating the whole interim budget rather than one line.
• Before accepting handover, confirming when charges start and when you can actually occupy.

Domira works alongside the finance side of a property purchase or a build: the valuation evidence, the cost plan and the construction programme that a lender needs to see. The lending terms come from your bank or finance company, and Domira makes sure the property side of the file stands up.