18 May 2013
The Government should commit to continue to support the self build sector well into the future, and should encourage local councils to learn from each other so that the best solutions for growing the self build sector can be quickly passed on to others.
These are two of the key recommendations in a major new report into the self build sector, commissioned by Lloyds Bank and produced by a team from the Centre for Housing Policy at the University of York.
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The report also calls on lenders to do more to assist the expansion of the sector by developing a range of simpler self build mortgages that are tailored to match the levels of risk associated with different types of self build. It also suggests lenders, developers and councils should work together to find smart ways of funding large scale self build projects.
Welcoming the report at the House of Commons on Thursday, Housing Minister Mark Prisk said that the self build sector had great opportunities, but also faced challenges, one of which was getting finance for self build projects. He said progress was being made – with hundreds of self build plots now in the pipeline –and, during the launch, there was praise for the role of The Self Build Portal in improving the dissemination of clear information to self builders.
Prisk also welcomed the establishment of the first ever All Party Parliamentary Self Build Group, and said that this would help to ensure initiatives to develop the self build sector would get wide political backing in the future.
Richard Bacon MP, the chair of the newly established Group, also welcomed the document. “This report lays the foundations for the growth of the UK self build market. It will help policymakers, lenders and developers to identify problems, find solutions and ultimately make self build a more attractive option.” Many other MPs attended the launch from across the political spectrum.
The report claims that self builders currently see access to finance as more of a challenge than finding and securing a building plot and/or obtaining planning permission. “Access to land and planning permission were less difficult than previously reported, with most respondents finding planning straightforward, even if onerous and potentially costly conditions were occasionally imposed”, it says.
The report says self-builders who need mortgage finance still face considerable constraints. “There were few lenders in the market, significant deposits were required, decision-making was slow and the narrow range of products failed to recognise the different risks associated with different forms of self-build. Development finance was tightly constrained, particularly for group projects,” it says.
Reacting to the report the chief executive of BuildStore (the self build sector’s largest mortgage broker), Raymond Conner, said: “This is certainly a useful report, and one that serves to re-affirm the findings of previous reports on the self build market, including the 2001 Barlow report. The difference is that we now have a government that is willing to support and invest in the sector, and indeed, a more developed self build industry. The key will be to combine that willingness with a unified industry to transform the sector in to a mainstream contender.”
The Managing Director of Lloyds, Stephen Noakes (pictured), said he would personally champion the self build sector and work with other large lenders to make it easier for self builders to get mortgages in the future. At present Lloyds is responsible for about a quarter of all the lending to the sector and none of the other big banks currently lend.
One initiative that Lloyds is exploring is a simpler (and presumably lower cost) mortgage product specifically for self builders who construct kit homes, where the financial risks of cost overruns or other problems are lower.
Among the recommendations put forward by the study was a suggestion that the Government investigates whether self-build housing could be considered as a part of an Affordable Housing Programme, or be classified as ‘affordable’ in terms of the planning regulations.
The Government was also asked to commission a cost-benefit analysis of the various self-build delivery ‘models’ that have emerged in recent months so that others could learn from the ones that have proven to be the most successful.
