I first wrote a blog about custom-build in 2012, highlighting how this sector had to be taken seriously if we were to increase new homes output and respond to consumers’ increasing demand for more choice in the homes they live in.
Well, four years on and we are at the dawn of some real change. The Self-Build and Custom-Build Housing Act becomes law on the 1st April 2016, and it places a duty on each of the 353 local authorities in the UK to keep a register of individuals and community groups who have expressed an interest in acquiring serviced plots of land.
The idea of the act is to bring forward self-build and custom-build projects to take account of and make provision for the interests of those on such registers in developing their housing initiatives and their local plans.
It also allows volumes of house-builders to include self-build and custom-build projects when contributing towards their affordable housing obligations. This will finally help us map needs with supply and you might be surprised at the levels of interest.
The Custom-Build Register, which is available through Custom-Build Homes by Buildstore, has registered 25,244 new customers in the last three months and these numbers are increasing on a monthly basis.
Surrey County Council, Wiltshire Council, Basingstoke & Deane Borough Council, East Hampshire District Council and East Devon Council are the top five councils where registrations have occurred in the last three months, which is no surprise as they are all areas with very high demand and little supply.
Government support for this initiative is also growing. The last few times I’ve heard the Housing Minister, Brandon Lewis, speak he has mentioned self-build and he was quite clear when I interviewed him in 2014 that custom-build would have a significant impact on the number of new homes we deliver over the next five years.
It’s all good news for another sector of the market which will be dominated by the intermediary sector and provide valuable options for land-owners and new homes agents.
However, we still have to address a lack of appetite and involvement from the lending community. Working very closely with leading specialist lending providers, BuildLoan, it feels a bit like residential new-build did five years ago where we were constantly fighting against legacy issues and perception of risk.
We all know that the new-build market has changed totally, with everybody wanting a piece of the cake, which is great news for new homes intermediaries and customers alike but we have nothing like this level of support in the self-build sector.
Traditional self-build has been fabulously supported, largely the building society sector who have done a fantastic job of understanding the process and working with specialist brokers.
But with demand for custom build ready to take off, the volume of lending needed can’t be absorbed by a relative few, and we now need greater support from lenders.
Stage payments have, in the past, presented a problem to some lenders but have worked well for others for many years. Other lenders have looked at development banks, which may be a viable option, but at what cost? And how long will it take to bring this to market?
Personally, I believe that we already have workable solutions and all we need is more lenders to come to the party, or even help us organise the party, rather than turn up when the party’s almost over.
Andy Frankish is Mortgage Advice Bureau’s new homes director