24 June 2022

Help To Build: Could Self-Build Be for You?

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With news that the Government has launched a new equity loan scheme for the self-build market, we thought we’d take a look at what self-build actual is and whether it could help get more people on the property ladder and into their dream homes.


Help To Build


So, what is self-build?

According to the Home Building and Renovation website, self-build is an increasingly popular route to property ownership in the UK, although it still represents only a fraction of new builds, some way behind the continent, where approximately 50% of new build schemes are self-build.


Self-build involves an individual commissioning a house to be built on a piece of land that they own, with the intention to live in it as their main residence.


We’ve probably all seen Grand Designs but even if you don’t have an astronomical budget, a self-build project could still be within reach. Here at Hannells we have seen an increasing number of self-build projects over the last few years, with one of the main options being retiring couples choosing to commission a single storey home on land attached to their current property, allowing them to downsize and sell the existing property to part fund the new build.


Whilst self-build can sometimes seem like the ideal way to achieve your dream home, it can have its pitfalls. With self-build you will be much more involved in the design process, choosing tradespeople and sometimes even managing all the elements of the project, including sourcing land and dealing with planning permissions, which can lead to a lot of stress and sometimes sleepless nights! And, of course, organising funding is a very large part of the process.


Finding the right piece of land in the right location, purchasing the land and creating realistic budgets for all the elements of the build could become overwhelming, but, if you are prepared for this, you can truly create your dream home, tailored precisely to your requirements and for a price that could be significantly lower than purchasing a new build home on a new development, where sale prices have to include developers profits.


Government Help

As part of the much publicised ‘Levelling Up’ plans, the Government has unveiled the Help to Build Scheme, aimed at helping thousands of people in England get on the property ladder by backing 95% loan to value mortgages for them to build their own homes.


Applicants will also be able to borrow between 5% and 20% of their costs across England – and up to 40% in London, through a government equity loan. The Government hopes that “This innovative scheme will build on our work to break down the barriers to home ownership, as well as creating new jobs, supporting the construction industry and kick-starting a self and custom build revolution”

Borrowers will have three years to build their home and will need outline planning permission before getting the government and bank funding.

Similar to the Help to Buy scheme, the equity loan is interest-free for the first five years but charges will apply from year six.

According to the information released so far, the total build cost cannot be over £600,000 or over £400,000 if the land is already owned, interest will be 1.75% of the equity loan amount borrowed increasing in April each year by the Consumer Prices Index plus 2% and applicants must live in the property as their primary home.


So, could self-build be an answer to the low levels of property stock in the market, and could it help younger people get on the property ladder in locations where property prices have soared?

We aren’t sure just yet and, as land is currently at a premium, finding a plot to build on could be the biggest challenge.


As always, if you need any information about the property market, buying, selling or renting, just get in touch with your nearest Hannells branch, you can find your local team here.