While we are still waiting on the self-build revolution that was branded imminent by politicians three years ago, the path of self-build has taken a shift this week. Housebuilder Charles Church, working alongside Newcastle City Council, launched 39 self-build plots in a variety of sizes to suit a range of budgets as part of the national drive. While high-end property developers have offered self-build plots like those at the Lower Mill Estate in the Cotswold, Beal Homes at their Burton Waters development in Lincoln and the GWest development near Gleneagles, if Charles Church's affordable offering is a success other national and regional housebuilders may well follow the developer's bold move.
While you may think the idea of a housebuilder offering self-build plots sounds contradictory, the people who have struggled to get planning permission or finance for their own project might have appreciated a middle man to make life easier for them.
Self-build in its simplest form is where a person buys a plot of land and secure a mortgage, get planning permission for their home, do the work themselves or contract the tradespeople to do the work and live happily ever after in their personalised property. That way they should be providing work for local tradesmen, easing the housing crisis and helping themselves up the ladder when they sell their home for a profit as self-build can be significantly cheaper than buying a new build or older property. However far from doubling self-build homes, and making them 25% of new builds, as government strategy set out to do in 2011, between September 2011 and September 2012 only 9% of homes built in the UK were self-build according to Homebuilding & Renovating. The UK continues to have one of the lowest rates of self-build in Europe and yet other countries like Germany and Sweden have thriving self-build industries. The two main problems in this country with self-build are finance and planning permission.
When it comes to finance, only certain lenders offer self-build mortgages, or stage payment mortgages as they are technically known. One of these, Virgin Money pulled out this week claiming there wasn't enough interest in the product, according to Mortgage Solutions. A report last month by Lloyds Banking Group and the University of York highlighted applicants are facing "considerable constraints" in securing finance - a trend which most househunters have found to be true since the recession. While the report estimated 50 to 60% of current self-builders do not need mortgage finance to start building as they often had equity from the sale of their existing homes, moving beyond the foundation stage can be an issue. When TV presenter Laura Hamilton spoke to What House? this week, the Beat My Build star mentioned that she secured a nearly finished self-build home from a builder who had run out of finance to finish the project. She recommended househunters looking for a new property to keep an eye out for these kind of almost finished projects as they are a great investment.
The report recommends lenders provide more guidance to self-builders about the criteria for funding and also recommends developers work with purchasers to provide"packaged solutions" to speed up self-build developments which Charles Church has done.
An all-party parliamentary group for self-build to explore how to boost the number of self-build projects has been set up following the report and they have been discussing potentially including self-build mortgages into the Help to Buy scheme. Richard Bacon MP said to Mortgage Strategy the group will look at whether it is feasible to include self-builds in the mortgage indemnity element of the Help to Buy scheme, which launches in January 2014.
According to the same report, pressure with planning permissions has eased, which is positive considering the ongoing tensions between housebuilders and planners. Last month, Planning Minister Nick Boles challenged councils to find land for people who aspire to self-build and if Charles Church prove there is a market for post planning permission self-build plots this could really take off.
It seems like an obvious assumption that with property developers as middle men, the price of the plots will be higher than they would have been as it has to be profitable for the housebuilder. Councils and the government should keep the Help to Buy price inflations in mind and be careful that prices don't rise to the point that it is no longer a viable option for those with smaller budgets. If regulated properly, Charles Church may have started something which could help tackle some of the current problems with self-build. And if this is picked up on a national scale, the housing crisis may be one step closer to being solved. Read the full story at What House?