Contractor from Birth – The Complete Guide to Building a Private House

How Do I Know If I Can Build the House Myself?

Building a private house is a long and prolonged process, involving many fields that all require attention and the right decisions in each area.
These fields can be very different from one another and include all the elements that the house is made of, starting from bureaucratic issues such as obtaining building permits, through technical matters like the engineering design of the house and infrastructure layout, and even creative aspects such as aesthetic choices and interior design of the house.
To do this in the best possible way, I need to ask myself several important questions:

• Am I curious? That is, do I want to delve into and research all these topics in order to understand them well enough to be able to discuss them with professionals?
  Most likely, no one has comprehensive knowledge in all areas to truly do everything alone, and building a house is always a joint venture.
  But to be at the center of the building project, I need to have enough knowledge to effectively communicate with all the relevant professionals, understand their proposals, express my desires, and collaborate efficiently.

• Do I have high self-discipline? That is, can I dedicate the many resources this work requires?
  At the end of the day, this is a house where I am going to live, so I need to make sure it will be the best possible home.
  Therefore, building the house is not a task I should neglect, set aside, or fail to invest proper effort in, because I will be the one paying the price later.
  I must be sure I have strong motivation and that I will persevere until the work is complete, and even when difficulties and problems arise along the way, I won’t give up and will continue working.

• Do I have the time for it? That is, do I have enough time to invest in building the house?
  All the curiosity and motivation in the world won’t be enough to manage building my house if I don’t have enough free time to dedicate to this work.
  Building the house should only be undertaken if I know I have sufficient free time, both considering the workload from my other occupations and my ability to organize my time properly.

Setting a Budget – How Much Will It Cost?

The first thing to do before starting is to define my budget.

By setting the budget, I will know exactly what I can build, how much I can invest in every aspect of construction, and more.

Budget definitions must take into account the expenses related to the construction, which are divided into several categories: land expenses, bureaucratic expenses, construction expenses, professional fees, and additional expenses.

• Land expenses: To build, you need land to build on, and its price can vary according to many factors.
  However, the main factor influencing the price of the land is its location—the higher the demand for the location, the higher the price.
  Before setting the budget, I must define how flexible I am regarding the land location and then research the prices of the locations I have chosen.
  Choosing the land itself is a whole topic on its own, with many factors to consider when selecting it.

• Construction expenses: Construction expenses cover “up to key delivery,” meaning everything needed to erect the building with all its infrastructure, including internal and external finishing.
  What construction expenses do not include are the home’s contents, such as furniture, appliances, and lighting fixtures.
  The average construction cost is about 7,000 NIS per square meter.
  In some cases, this number can be reduced, with prices dropping as low as 5,000 NIS per square meter, but in most cases, the opposite occurs.
  If I do not want to compromise on certain aspects of the house related to interior design, such as flooring, wall cladding, window and door design, or decorative material combinations, the price may increase.

• Bureaucratic expenses: The bureaucratic matters around construction can be numerous and varied.
  Among the main ones are the betterment levy (if required), building fees, and building permits.
  The betterment levy, if required, should be paid by the land seller during the sale.
  If it’s not a land sale, the betterment levy must be paid before construction begins.
  Building fees are paid to the local authority where the land is located, so they may vary from one authority to another.
  These fees cover sewage, sidewalks, roads, and more, usually amounting to about 250 NIS per square meter.
  The building permit fee is paid to the local planning and building committee and is about 25 NIS per square meter.
  Additionally, there is a bureaucratic fee to the Standards Institute for contract processing of about 2,200 NIS, and additional fees such as file opening and plan copies totaling about 3,000 NIS.
  Other bureaucratic expenses may arise at the time of land purchase for professionals handling bureaucracy, including lawyers and brokers (each typically charging between 0.5% and 2% of the land value, excluding VAT).

• Professional fees: No matter how independent I want to be while building the house, there are professionals I must at least hire as consultants by law.
  The first is an architect, whose fees may vary depending on their prestige.
  On average, the architect’s fee is about 150 NIS per square meter, excluding VAT.
  Another professional is the structural engineer, whose fee is about 35 NIS per square meter, plus a site manager and construction supervisor, whose fees are very flexible and specific to each project.
  Lastly, there is the soil consultant, usually charging 1,300 NIS for a report and 800 NIS for two drillings, and the surveyor, who charges 2,000 NIS for the first half-dunam survey and 800 NIS for each of two additional surveys.

• Additional expenses: Additional expenses can be many and varied and include all the finishing touches of the house.
  This mainly includes home equipment such as furniture, decorations, appliances, lighting fixtures, climate control, and more.
  Also, since this is a private house, there will likely be expenses for exterior landscaping.
  Because these matters are quite individual, it is difficult to attach a uniform sum to them, and they can vary greatly between houses.

Choosing the Land

The first characteristic to consider when choosing the land is the location.
Location greatly influences the price of the land and, accordingly, the daily life we will have when living in the house.
It’s worth examining the quality of life in the land’s area, the various services available nearby, and transportation.
A convenient way to assess the neighborhood’s quality is by checking the amount of green space relative to built-up areas.
In addition to location, there are many other characteristics to consider, related to the land’s potential for building:

• Air and light directions: How is the airflow to the land? At what hours will the house be exposed to natural light, and from which direction?
• Noise pollution and other nuisances: What is the level of traffic near the land? Are there other external nuisances such as a high-voltage power line, pump station, cellular antenna, etc.?
• Topography: Is the land sloped? Sloped land has a higher potential for pleasant views and better utilization of light and air but is harder to work with and will increase building costs.
• How many square meters can be built on the land: What is the main area, and what are the building percentages?
• What is allowed to be built: Is it allowed to build a basement? Can an external storage room be built? Can a covered parking space be built?
• Betterment levy and building fees: Is there a betterment levy on the land? What are the building fees according to the local authority?

Mortgage and Approvals

Before beginning actual construction, somewhere between purchasing the land and hiring the relevant professionals, all bureaucratic matters must be taken into account.
Among these are the approvals and forms mentioned above, which are part of the construction expenses.
The main approval, without which construction cannot begin, is the building permit.
In addition to these permits, another important matter is the mortgage.
Many people need a mortgage to build their private home, and to obtain one, they must present relevant documents to the bank showing they can meet the repayment obligations.
It should be noted that a construction mortgage differs from a mortgage for purchasing a built property, with two main points being:

• Equity: The mortgage for building a house is up to 60%, not 75% as with buying a built property.
  Therefore, to build the house, I need to have 40% equity of the total construction costs.

• Mortgage disbursement in stages: Unlike buying a built property, where the entire sum is transferred to the seller at once, building costs are spread throughout the construction process.
  Accordingly, the mortgage for building a house is not granted all at once but is given in stages according to the progress of the construction.

End of Construction – Form 4

After the time has passed and the house is built, all that is required is approval from the authority confirming the house is fit for habitation.
This approval is called Form 4, and to receive it, an application must be submitted that triggers an inspection of the building to verify it was indeed built according to the plan and is safe and suitable for living.
After receiving Form 4, the house can be connected to all infrastructures, and it is legally possible to live in it.