Could self-build homes help meet government housing targets?

The new government’s plan to build 1.5 million new homes, to address Britain’s housing crisis, is undeniably ambitious – and some believe that self-build could be essential in supporting this target.

Darlington Building Society, for example, is urging greater support for those wanting to build their own properties, and has welcomed the Chancellor Rachel Reeves’s recent inaugural speech, laying out plans to review green belt boundaries, to prioritise 1.2 million brownfield sites.

This, the building society believes, could go some way to providing self-builders with the much-needed land and permissions to build their dream homes.

How much demand if there for self-build homes?

Broker Raymond Connor (pictured left), who set up his own business specialising in self-build products, considers the demand is there.

“I believe, given the undoubted demand for self and custom build, it could easily deliver around 30,000 homes per annum, which equates to 10% of the government target,” he told Mortgage Introducer.

Connor is founder and CEO of the BuildStore Group, based in Livingstone in Scotland. Some 75% of its business is self and custom build, and it has developed specialist self-build products with its panel of lenders.

The Self-build and Custom Housebuilding Act 2015, Connor explained, places a duty on all local planning authorities in England to log the interest of local residents who wish to purchase a serviced plot on which they can build their own homes.

It’s thought that 50,000 people have signed the UK-wide Right to Build Register - there have been over 250 applications in the past 30 days, with just 7,000 plot opportunities thought to be available. BuildStore’s online PlotSearch service, which collates information on plots available for sale, has over 120,000 members.

“Demand, therefore, is significant,” said Connor. “We receive around 500 new enquiries each month in relation to mortgages. These range from people at an early stage looking to find out how the finance works, to the majority who either own or have identified a plot they wish to purchase.

“People from all walks of life are looking to build. I would say it’s the self-starters who wish to do their own thing – a large proportion of our client base is self-employed. The complex nature of the advice can sometimes be difficult to get across to clients, who in too many cases believe they can build for much cheaper than is really possible. 

“Interest rate and fees, whilst always important, will definitely come behind the need to ensure the cashflow for the project is guaranteed, and the client doesn’t run out of money half way through the build.”

Connor further noted that many local planning authorities operate a quota policy which requires house builders and developers to allocate a given number of self-build plots. Over the next five years, these policies alone are expected to deliver around 5,000 plots per annum, he said.

“From my point of view, I believe the self-build mortgage market will grow,” Conor shared, “but great care will be needed by brokers who wish to enter the market to ensure they have the requisite knowledge and processes in place to provide the service the would-be self-builder needs.”

Read more: Hanley Economic launches new interest-only self-build

What impact could self-build homes have on the housing market?

Darlington Building Society, which lends on self-build projects up and down the UK, believes that with increased support for independent self-builders, the government could clear the path for more to follow. It would effectively create a supplementary stream of housebuilding that is not reliant on large corporations and associated red tape delays. Furthermore, the lender argues, it would drive diversification of housing stock to provide future generations with a range of architecture alongside what it describes as ‘out-of-the-box mass market homes’.

It points to what it describes as the “gloomy” new build market of 2023, when there was a decrease in new home registrations - the process by which a developer registers their intent to build a property. These, it said, totalled 105,449, compared to 189,009 in 2022.

“The scope to amplify housebuilding rates with self-build is huge, but support for the individuals is needed,” said Chris Blewitt (pictured right), Darlington’s head of intermediary distribution. “We need housebuilding to be firing on all cylinders to reach the target set out by the Chancellor - 50% higher than the previous 200,000 homes per year target, which was never met.”