Aspiring homeowners need to know more – and brokers can help them
Custom-build housing can help solve the UK’s housing crisis, according to Saffron for Intermediaries, but education is needed to inform the young people who could benefit most from it.
Brokers can play a key role in ensuring that they are fully aware of an option that could be a perfect fit for them, the lender believes.
Its latest research suggests that almost two thirds of 18-24-year-olds surveyed are considering or have considered custom-build homes, as they explore alternatives to the traditional house-buying route.
In this type of housing, a buyer will work with a developer as an individual or a group to help deliver a home tailored to their needs. The developer may help to find a plot, manage the construction and arrange the finance for the new home.
Some 1.9 million aspiring homeowners don’t believe they’ll follow in their parents' footsteps to own a property, according to Homeowners Alliance, a body that champions the interests of Britain’s property owners.
Tony Hall (pictured), Saffron’s head of business development, believes the interest from young people is likely a response to the current affordability issues which beset many first-time buyers.
"It’s no secret that the younger generation is currently facing huge hurdles in the housing market,” Hall told Mortgage Introducer. “Between high property prices and the lasting impact of the cost-of-living crisis, buying a traditional home feels out of reach for a lot of people. That’s why so many younger buyers are open to custom-build, as it offers a way to create a home tailored to their needs, often at a more affordable price than buying a pre-existing property.
"But there’s also a clear knowledge gap. While 64% of 18-24-year-olds are open to the idea of custom-build, only 39% actually know what it involves. A lot of people think it’s like self-build, where they’re in charge of the entire project, but that’s not the case. Custom-build takes away a lot of the hassle, and buyers get the home they want without needing to manage all the details.”
He continued: “Custom-build is definitely part of the solution, and while it’s not a massive slice of the market yet, it’s growing steadily and offers something different. By opening up options for people who want a more personalised, affordable route to homeownership, custom-build can help meet demand in ways that traditional developments often can’t.”
How can mortgage brokers raise awareness of custom-build houses?
Hall believes there is an opportunity for lenders and brokers to step in, to advise buyers and clarify what the option could offer them.
"My advice for brokers is to get comfortable with the unique structure of custom-build finance,” Hall said. “Unlike traditional mortgages, custom-build mortgages are released in stages as the project progresses. Typically, the first payment will be for the plot, with the remainder at pre-agreed stages throughout the build. This setup is designed to manage risk and match the cash flow with construction, which can actually be quite reassuring for both the lender and the client.”
Brokers can add real value, Hall suggests, by guiding clients through the custom-build process and helping them understand the different options that are available to them - for example, introducing them to the Right to Build register, which allows individuals to express interest in a serviced plot within their chosen local authority area, simplifying the land acquisition process. With a solid understanding of custom-build products and local regulations, brokers are well-positioned to fully support these clients, in Hall’s view.
"There’s a need for more education on custom-build, no doubt about it,” he said, “Twenty-eight per cent of potential buyers say they’d be more inclined toward custom-build if they just had more information. There’s a lot of demand here that could be unlocked with the right guidance and awareness. Lenders and brokers have a real role to play in making custom-build feel achievable and inclusive, helping more people explore this as a viable route to homeownership."
Read more: Majority of landlords fall short of proposed EPC targets - study
How can custom-build homes support sustainable housing goals?
Hall suggests that custom-build properties can support the government’s housing and sustainability goals. With Labour’s recent commitment to ensure all social housing reaches an EPC rating of at least ‘C’ by 2030, there’s a clear push from the government to make housing more sustainable and affordable in the long term.
These projects allow buyers to prioritise energy-efficient design from the outset, incorporating features like high-quality insulation and efficient heating systems.
“Research shows that custom and self-build homes can reduce CO2 emissions by up to 43% compared to traditional builds, which is a real plus for meeting climate targets,” Hall noted. “By supporting more people in choosing custom-build, we’re not only adding to the housing supply but also helping meet sustainability standards that will benefit residents and the environment alike."
