What self-build market changes really mean

The self-build market requires significant further structural and cultural change if it is to become a conventional housing option within the next decade, according to the Build-it-yourself Report from Lloyds Banking Group in partnership with the Centre for Housing Policy at the University of York.

At present, the UK self-build market lags behind other European countries; with around 12,000 self-build homes delivered per year it accounts for 7.6% of the new housing supply. This compares to Hungary (52%), France (38%), and the Netherlands (10%). The Government’s stated aim is to double the output of self-build housing from 100,000 to 200,000 over the next decade.

Self-build remains a highly bespoke activity, with considerable variety in the way it occurs. It can often take up to two years to access land and, with numerous design, construction, and funding methods available, it can take a further two or more years to complete a build.

The average self-build project costs (including land) £255,543, and the self-build market is currently worth around £3.6billion per year.

The report shows that self-builders tend to have higher incomes and/or higher housing wealth and that younger, lower income households are infrequent builders.  If self-build is to offer a way in which they can pursue access to housing, the forms of procurement will have to accommodate their lack of equity and savings and offer considerable support.

Lenders remain more risk averse than they were before the financial crisis and there are fewer active lenders in the market than before. The lack of volume in self-build is a crucial deterrent for many as they see no business case or moral imperative to enter/re-enter the market.

Led by developers, local authorities, and housing associations there is currently some impetus in the market, with new models of group self-build delivery and multi-plot individual schemes emerging.

There is evidence of their success in helping self-builders overcome problems such as limited experience and access to land, and also in the provision of project management support and help with securing planning permission.  However, many are “pilot initiatives” and it is unclear as yet which approaches have the capacity to deliver volume.

Stephen Noakes, Mortgage Director, at Lloyds Banking Group, said: “The recent Government-led initiatives have been encouraging, but they need time to work and if the outcomes are to be successful then these activities need long-term support.

“If the sector is to grow and become part of the mainstream market then more work needs to be done in terms of sharing information and standardising practices. We need to see more coordination between both national and local government and the lending industry if we are to achieve this.

“On top of this, a finance industry-wide working group would help generate a greater understanding of the risks and could encourage more lenders to enter the market. This would then increase the supply of accessible products which can be tailored to the needs of self-builders and the different models of self-building, boosting financial support for the sector.”

Dr Alison Wallace at the Centre for Housing Policy said: “The self-build sector has the opportunity to grow but self-build is usually a long and often circuitous process.  Unlike the guidance offered to first time buyers, key agencies do little to inform self-builders of what is required of them and what they can expect from the process.

“If the sector is to become a mainstream component of the housing market, attracting younger, less affluent households, its structures and processes-along with the support provided – will have to be smarter and more co-ordinated. This suggests a greater focus on multi-plot sites or group provision associated with ‘enabled’ development. However, at the moment it is too early to assess which of the new models will prove to be effective. Ongoing Government support is required to sustain the current momentum.”

Richard Bacon MP, Founder, All Party Parliamentary Group on Self-Build said: “Self-build shouldn’t be the preserve of the most affluent.  It needs to become a mainstream part of our housing supply to give people more influence, choice and satisfaction in the provision of their own homes.

“We need to make people more aware of the tremendous possibilities of self-build. Lenders have an important role in developing the products which will help the sector to grow. Government must make sure that bad rules don’t get in the way.

“I am founding the All Party Parliamentary Group on self-build and Independent Housing to raise awareness and promoting a better understanding of the Self-Build sector among MPs. Parliament must play its part in promoting the step-change that is necessary to help tackle this country’s housing challenges.”

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