The Help to Build scheme aims to make self and custom-build home building more accessible and affordable whilst also making a significant contribution to the country’s housebuilding ambitions.
Indeed, the government said Help to Build could deliver 30,000 to 40,000 new homes a year.
According to BuildLoan, which provides finance for these kinds of building projects, the new scheme will also bring new opportunities for brokers to widen their client base and for lenders to expand their mortgage range.
It explained Help to Build worked along the same lines to the Help to Buy scheme, whereby the borrower pays a 5% deposit, the government provides a loan of 20% and the other 75% of the build cost is through a self-build mortgage.
The main difference between Help to Build and Help to Buy, BuildLoan explained, was the government loan was paid to the mortgage lender rather than the house builder.
Making self-build mainstream
Launching the scheme on Saturday, the government said lowering the required deposit would free up capital, so people could build the home they wanted and needed whether it was a commissioned, made to order home, or a new design from scratch.
Robert Jenrick, the housing secretary said: “Building your own home shouldn’t be the preserve of a small number of people, but a mainstream, realistic and affordable option for people across the country. That’s why we are making it easier and more affordable – backed by over £150 million new funding from the government.”
He added: “Our plans will help get more people on to the housing ladder, ensure homes suit people’s needs like home working or caring for relatives, whilst providing an important boost to small builders and businesses too.”
Andrew Baddeley-Chappell, CEO, National Custom and Self Build Association described the new Help to Build scheme as ‘an important step towards greater customer choice for those with ambition, sound plans and smaller deposits’.
He added: “Custom and self-build is about the homeowner having control over the design and specification of their project – enabling them to create the home they want, rather than the one someone else believes they would like.
“This scheme is all about delivering more and better homes, that more people aspire to live in and that communities are happier to see built.”
Pent-up demand
Meanwhile BuildLoan said it welcomed the announcement. It’s CEO, Raymond Connor said: “We are extremely supportive of the Help to Build scheme and have been advocating this for a long time. It is similar in nature to the Help to Buy Equity Loan scheme and will be a real boost to the self and growing custom build market.”
He thought it would open up self-build to more people as a 5% deposit was required instead of the typical 20%.
“We know there is pent up demand for people wanting to build their own home as evidenced by 55,000 people signed up to local authority Right to Build registers,” he added
“Volume house builders dominate the new build market but this scheme will open up opportunities for SME property developers to expand the custom build sector.
In anticipation of the announcement, BuildLoan has developed products to support the Help to Build scheme and was working with lenders.
The government also published the self and custom build action plan, which sets out its measures to support the sector.
It includes the next steps in the review of the Right to Build legislation, to assess whether further reforms are needed and confirmation of further funding for the Right to Build Task Force.
