Help to Build
Building your own home is becoming easier and more affordable. Have you ever dreamed about building your own house but never thought you would be able to afford it? Then there’s some good news. The government has launched a new £150 million fund aimed at making it easier and more affordable for self-builders to build.
The ‘Help to Build scheme’ aims to make self and custom home building a ‘realistic option’ to get onto the property ladder through lower deposit mortgages.
The scheme will provide an equity loan, similar to the Help to Buy scheme. And it will be available to you whether it’s a commissioned, made to order home or a new design from scratch. This will make building the home you want more achievable for many people.
There are huge benefits to building your own home. For example, if you opt for a made to order home, you can customise your new home based on existing designs. This means the space can be designed for your needs, such as making it suitable for older or disabled people.
The Government says the scheme could deliver 30-40,000 new homes a year.
How will it work?
The full details of how it will work have not yet been revealed. However, the government says it’s going to publish a prospectus with more information later this Spring. And you’ll be able to apply for the scheme from late Summer.
How will it compare to Help to Buy?
With the Help to Buy Equity Loan scheme, the government will lend you up to 20% of the cost of your new build home. This rises to up to 40% of the value if the property is in London. This is called the equity loan. You’ll need at least a 5% deposit and the remaining amount of up to 75% will come from a specialist mortgage product.
However, the Help to Buy Equity Loan Scheme isn’t suitable for self-builders. This is because it needs the equity loan to be paid on legal completion to the developer. This wouldn’t be suitable for custom and self-build as they’d normally need multiple payments to different parties.
While the details of Help to Build are yet to be revealed, the government has developed the scheme with Homes England in consultation with the National Custom and Self Build Association (NaCSBA).
In NaCSBA’s proposal, self-builders would secure a self-build mortgage with a 5% deposit, with the mortgage lender providing 95% of funding for the project, guaranteed by the government in case you default. And when the build is completed, the government would provide 20% of the cost of the build to the lender. This would reduce the outstanding mortgage value to 75%. And you would have a 15% equity loan from the government.
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What else is stopping people building their own homes?
As well as access to finance, the government has highlighted two other main barriers preventing more people from building their own homes. These are access to land; there aren’t enough serviced plots – plots with planning, utilities and access – suitable for self and custom build available. The other factor is the expertise and knowledge gap; the availability of consultancy expertise is limited and the wider knowledge base of self and custom build is low.
How are these issues being tackled?
The self and custom build action plan published by the government details how these problems are being addressed. These include plans to increase the amount of plots available on brownfield land. As part of last year’s Spending Review, the government announced extra funding for local authorities to release their surplus brownfield land through the Brownfield Release Fund. This will allocate up to £25 million to local authorities to enable them to bring forward serviced plots for self and custom build on public sector land.
And in terms of bridging the knowledge gap, the National Custom and Self Build Association’s Right to Build Task Force was established to help local authorities, community groups and other organisations help deliver self and custom build housing projects across the UK. It provides expertise and support to local authorities on the implementation of the Right to Build and how to secure self and custom build delivery.
‘An interesting scheme – but let’s see the details’
HomeOwners Alliance Chief Executive Paula Higgins says, ‘We welcome the Help to Build scheme; many people may feel building their own home is out of their reach and this could make it a reality. The added bonus is that we will reduce our reliance on the big developers to build the homes we need.
‘We’re keen to see the details of how this will work and encourage government to tackle the other obstacles from building their own home – the difficulty in finding suitable land and the lack of confidence and expertise in undertaking such projects.’
What do you think?
We welcome your thoughts on custom and self-build houses in the comment section below. Would you consider it?
If you’re interested and want to learn more about the process, visit www.selfbuildportal.org.uk