Kit Homes: How Much Can You Save by Owner-Building

A very common question owner-builders ask is "how much would I save if I owner-built my own home?" As a very quick reply: for custom-designed homes, builders generally hire a carpenter, or charge a carpentry rate, and put a margin on top of the materials. Typically in Queensland, builders add around 25-30% margin. In other areas, it is not uncommon for margins to be in excess of 30%.

On top of this, there could also be franchise fees of 10%. Then you also have GST of 10% added on top of everything. That's a massive 50% going to the builder and the tax man, on top of the carpenter who is actually building your home.

With a kit home, you are engaging the carpenter directly and they usually charge 10-15% markup, or possibly just carpentry rates if you are submitting under your owner-builder license. Why? Because they don't have the overheads of a large company. However, they usually need all drawings and engineering done and all materials delivered directly to site, as though they were working for another builder.

Things get better if you are owner-building. In this case, you are cutting out the carpentry rates as well, which could be $30,000-$40,000 on an average 200-220sqm home. However, other factors come into play, including the fact that owner-builders make mistakes and take much longer to build a home that a qualified builder. A task that a carpenter would complete quickly could take an owner-builder weeks in researching and talking to their certifier. It is not uncommon for some owner-builder builds to take 1-2 years to complete.

From experience, the most cost-effective method is to engage a carpenter to build the home to lock-up, with the owner then organising the trades and fit-outs once the main work is done.