Can Self Build Deliver Significant Housing Numbers?
We all know that the UK has a significant housing problem. Last year 113,340 homes were built in Britain, less than at any time since 1923, despite 230,000 new households being formed each year.
Banks continue to hold back funding for all but a select few. Housebuilders are building but only on the very best sites and are certainly not taking on any risky schemes. And why would they given sales are slow as purchasers continue to struggle to get mortgages and those that do often need significant deposits.
This looks like it will continue for a number of years at least whilst the UK’s housing problems continue to mount.
However, there is a lot of talk of a potential boom in self build in the UK.
Figures are often quoted about demand by people looking to build their own home (reportedly over 50% of the population would like to build their own home). A recent Ipsos Mori poll showed that over 6 million people in Britain are currently researching how to build a home for themselves and want to start their new home in the next year or so.
Buildstore have access through their panel of lenders to circa £500m with finance options available up to 85% of end value.
So fundamentally we have a huge market that potentially has access to finance. Surely this is a huge opportunity that can deliver a large amount of homes yet reportedly only 11,870 of homes were self built last year (just 9% of the total new homes built).
The traditional view of self build comes from programmes such as Grand Designs where often self builders have a difficult time in delivering over many months / years what are more often than not incredible schemes. However, these are often not mainstream housing projects.
The average self-build mortgage in 2012 arranged by Buildstore was £180,000. This is not a Grand Design budget. The majority of self builders are driven by having some control over the delivery of their home and also making some money. However the majority of projects are one off plots delivering one house.
To significantly contribute to the delivery of housing in the UK self build must deliver housing in a commercially efficient manner. Self-build schemes need to be delivered within a controlled timescale and be able to deliver housing other than detached units so densities can compete with speculative housing developments.
Is this where Custom Build can work? The above has historically been achieved across the globe. The most high profile case study is the town of Almere in Holland which has delivered all types of housing under the banner of self-build.
A number of Custom Build developments are now progressing. A number of different models of custom build will no doubt evolve in the near future. Our Custom Build model works by giving the purchaser (self builder) some control over the design of their home within an agreed set of parameters whilst also retaining control ourselves over delivery.
Our contract structure also allows for delivery of semi- detached or terrace housing. We are working on making this work for apartments as well.
Self-build can certainly be a sustainable form of housing. Purchasers design and specify their houses. Housebuilders will usually choose the cheapest solution to comply with building regulations and planning policy. Self-builders can choose to specify their homes to be a lot more efficient and environmentally friendly taking advantage of the latest technology to do so.
Surely it has to be more socially sustainable to allow purchasers to design the home to suit their needs and not have this dictated to them. The most beautiful parts of our built environment in the UK are made up of a mix of buildings designed individually whilst having respect to those around them. Opinion on design is down to personal taste. It is this diversity of taste and opinion that can create something that is more interesting than the current modern speculative housing estate.
So is Custom Build the solution to bring forward significant amounts of new sustainable self-build houses?
Spec housing development clearly will always deliver a significant amount of homes in the UK as fundamentally house builders will make more money from this business model. However, developers increasingly taking notice of the Custom Build opportunity given the potential size of the market, the cashflow benefits and lower risk profile of this model. Continued government support for self build is required which should include policies such as relaxations on the CIL requirements for self build schemes. However the commercial sector now needs to drive it forward. The signs are there that this is happening together crucially with developers such as bloc and H2O delivering schemes that include terrace and semi-detached units alongside detached. We will start to see in the coming months if Custom Build can work and deliver housing in an efficient manner to assist in solving our country’s pending housing crisis.