The Government wants to strip away the red tape, and make self-building more accessible to all of us.
Grant Shapps, the housing minister, has declared he wants a ‘home-building revolution’, where more of us take up the building of our homes ourselves, in the style of the Channel 4 TV show Grand Designs.
Shapps reckons that it’s far too difficult at the moment for people to build their own homes, as there are numerous bureaucratic barriers in place, including the planning system and various regulations. Instead, he wants to make building your own property a more mainstream option, and will be working with the National Self Build Association to come up with a better system.
They’ll be focusing on three main areas:
- The availability of land, including how to make public sector land available for house building
- The availability of finance
- The availability of expert support, looking at how self-builders can get extra help, and how self-builders can support communities looking to build homes.
Now, there’s obviously a political side to all of this. Home building levels in the UK are horrifically insufficient, and with the Government short of a few quid, they are in no position to address that currently. So getting us to do the hard work for them undoubtedly has its benefits.
The Community Right to Build
Before Christmas, the Government announced that its Community Right to Build programme would be rolled out across the whole of the UK, and it will certainly have a role to play in encouraging the growth of self-building.
It’s all part of the Conservatives’ Big Society idea. Groups of local people will be given the power to build new homes or community amenities, so long as they can demonstrate overwhelming local support for the project. In return, there will be minimal red tape to get through – effectively their projects will be fast-tracked.
So, in practice, the Government hopes that groups of people will come together to plan out whole new housing developments that they believe their community needs.
It all sounds lovely in theory, but there are a few potential hiccups in the way, namely exactly where such a group of locals will get the funding for such projects, and also whether there will be a way around the NIMBY (not in my back yard) attitudes among certain communities which have long since held back housing plans, no matter how modest.
Self-building homes
Currently, as many as 20,000 homes are built each year on a self-build basis.
If you’re interested in building your own home, one of the first things you’ll need to consider is where to build. There are a number of places where you can find yourself a plot for your project. Perhaps the best place to start is PlotSearch, a division of specialist self-build lender Buildstore. The site lists over 7,000 plots, conversion and renovation sites across the UK, with a detailed plot report covering each site.
Within the report you can see all sorts of information, including size, planning details and vendor information, as well as all sorts of maps which may come in useful. However, the site isn’t free – it will set you back £15 for a PlotSearch membership for three months, or £30 for 12 months.
There are free alternatives, like Selfbuildland.co.uk and Building Plot, though you won’t enjoy anything like the choice available from PlotSearch.
All about the money
Once you’ve got an idea of where you want to build, it’s time to get the cash together to finance the project. This is where things get complicated, as according to lender Buildstore, only a quarter of self-builders actually manage to get the money together to complete their projects currently.
Self-build mortgages work differently to traditional mortgages, in that the funds are released in stages as the project progresses, rather than you being given a lump sum at the outset and left to get on with it.
They tend to come in two slightly different forms. The first is an arrears-based mortgage, where you’ll get the relevant payment upon completion of that stage of the work. The alternative works as an advance payment scheme, where you’ll get the cash ahead of each stage of construction. Unsurprisingly, this is the option you’ll have most difficulty in securing, as it’s riskier for the lender.
Both of these types of mortgages are likely to be more expensive than traditional mortgages on properties which have already been built. Speak to a broker for help figuring out which type is best for you.
Getting lenders involved
So where do you get these mortgages from? There are a number of lenders currently involved with the self-build market, with varying levels of enthusiasm.
Perhaps the first name that comes to mind is Buildstore, who deal exclusively in self-build loans. They even launched a new mortgage last year (in association with Melton Mowbray Building Society and Ecomerchant) designed for those self-builders who built eco-friendly homes, a nice innovation.
Building societies are also a good place to look. For example, Norwich & Peterborough BS offer a discount variable mortgage for self-builders at a 0.05% discount from the lender’s standard variable rate. The rate currently stands at 5.30%.
However, the fact remains that not enough lenders are happy to dip their toe into the self-build market, or offer loans at rates that will actually make it a viable option for many of us. So one of the things we should expect to see in the coming months are measures to encourage more lenders to get involved with the self-build sector.
To be fair, it’s no surprise that lenders are somewhat reticent about lending on such projects – self-builders have something of a reputation for occasionally getting their sums wrong and ending up short of cash before the home is finished, while the very structure of self-build lending is markedly different to the relatively simple process of mainstream mortgage lending. That added complication is no doubt seen as just too much bother.
However, unless the Government come up with a tangible plan for getting more lenders involved, this home-building 'revolution' will be little more than a damp squib. The ball is in your court Mr Shapps.
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