More than half the population would like to build their own home, given the opportunity, according to a survey carried out by the Building Societies Association, and 100,000 people subscribe to plot-finding websites. The incentives are clear; it’s an opportunity to have a one-off home designed entirely to your own specification and, even when taking land costs into account, for a fraction of the price you would pay for an existing resale property or a new-build from a developer.
How difficult is it to build your own home?
Many people feel too many obstacles stand in their way, however, including finding and affording to buy the land, getting finance and dealing with the regulations and red tape. But the self-build landscape is becoming far easier to navigate, thanks to new government incentives that aim to promote self-building – based on pledges by David Cameron back in 2015 to double the number of people building their own homes by 2020 – and to awareness-raising by organisations such as the National Custom & Self Build Association (NaCSBA). As a result, the numbers of self-builders in this country rose by about six per cent in 2016, according to AMA Market Research, with the market expected to grow by up to ten per cent over the next two years.
The UK still lags far behind Europe in this respect, with self-build accounting for just 7-10 per cent of housing completions (equating to about 12,000 homes a year) compared with 60 per cent of the private house building market in France and 80 per cent in Austria.
But the planning restraints are easing up in this country and all local authorities must now provide registers to help self-builders find plots and ensure there is adequate land provision – part of the Government’s Right to Build initiative. The Government’s Help to Buy scheme also includes self-build projects, with loans available for those buying land for less than £250,000 (or under £450,000 in London) on which to build their own – and only – home.
Can anyone self-build?
What many people may not realise is that self-build finance is available to anyone who wants to build their home (provided they meet certain conditions). The self-build loan will fund the full build cost and 80 per cent of the land acquisition costs, with the self-builder generally expected to fund at least 20 per cent of the land price themselves. This also applies to the property price in the case of the purchase of a derelict property, where re-building would still be considered a self-build project.
Unlike development finance, which is based entirely on the value of the future development, self-build finance is all about the individual and is assessed on their income. You can borrow funds on an interest only basis, which will help keep costs down during the build, then convert the loan to a repayment mortgage once the build is complete.
Is it difficult to get a self-build mortgage?
The rise in interest in self-build means there is a far wider choice of self-build loans available – that sector of the loan market grew by nearly 50 per cent to £1.9bn a year between 2012 and 215 – and the rates are highly competitive.
With some lenders, too, the terms are increasingly flexible. Where some providers will insist on the self-builder only being able to draw down further funds once the project has reached a certain point, others are happy to allow a draw-down of up to 80% of the current valuation at any time.
A simpler self-building process – from the initial plot-hunting and planning stages to the finance, design and build – can help make a dent in the country’s housing crisis. We may yet, like many European countries, become a nation of self-builders.