Help to Build was launched this weekend and not only aims to make the self-build and custom-build market easier and more affordable to access but it’s also a way of creating more homes in the England.
According to the government, which has pledged £150 million towards to initiative, it could help deliver 30,000 to 40,000 homes a year.
The scheme will work in a similar way to Help to Buy. 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, however, is the government loan is paid to the mortgage lender rather than the house builder.
What’s more, the money for self-build mortgages is released at different stages of the build instead of one lump sum.
Lower deposit
Self-build mortgages typically require q 20% deposit to be put down in order for the applicant to be approved for the loan. However, with the Help to Build scheme requiring only a 5% deposit it’s likely to encourage a greater range of people to take on a self-build project.
Indeed, the government said it hoped the self-build market would go mainstream as a result.
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.”
‘Game changer’
Raymond Connor, CEO of BuildStore, which helps people with their self-build projects from finding a plot of land through to specialist mortgage advice, said: “We have been waiting for a scheme like this for years and are excited for the possibilities it will bring to the housing market.
He continued: “The Help to Build scheme will make it more affordable for budding self-builders and those who want to create their own home through the growing custom build route. They will only need to find a 5% deposit whereas typically self-build mortgage lenders require at least a 20% down payment.”
According to BuildStore there are 55,000 people on local authority Right to Build registers – therefore, there is clearly a demand from people wanting to build or customise their own home.
Indeed, for anyone interested in building their own home, this is where they register their interest and the local authority is obliged to find them a plot to build on within three years.
Connor added: “This scheme will be a game changer for the new build housing market. Most homes are built by large house building firms but Help to Build will open up opportunities for more individuals and smaller property developers.
“We have been working with a number of lenders on developing mortgage products to support the scheme and anticipate there will be a high degree of interest.”
