Many of you will be familiar with the term ‘custom build’ but if you’re not, it’s worth familiarising yourself with the concept. Many are predicting that custom build could be the future of housing in the UK and the main strategy employed by the government to solve the housing crisis.
What is custom build?
Custom build homes are self-built homes that are facilitated by a professional developer. They offer the chance to have a unique property that suits an individual’s lifestyle and preferences but minus the high degree of involvement associated with traditional self-builds. Custom building can describe a single one-off home commissioned by an individual and built by a developer, or a group of homes built by a developer but offering the future occupants the chance to tailor the design.
This way of building removes some of the usual frustrations of self-build, such as having to find a plot with planning permission or not having the necessary experience for building your home on your own.
Why is custom build a solution to the housing crisis?
The UK lags behind other developed nations in custom-built homes, but that could be about to change. Their advantages mean that the government sees this form of construction as one of the ways to solve the nation’s housing problems. Graven Hill in Oxfordshire is one of the largest experiments in modern day housing the country has ever seen. An entrepreneurial local council has bought hundreds of acres of disused Ministry of Defence land, created housing plots, then the street layouts, schools, and infrastructure to support them. Buyers can select a plot then design their home, which gets fast-tracked through the planning system.
The council spent £28m buying the land, and hopes to make a profit. Other councils are looking at the project with a view to expanding the concept across the country. It’s easy to see the attraction for local councils as it is an investment likely to boost depleted coffers while at the same time solving housing problems.
The problems brokers and lenders might face concern the valuation and unique design of these properties. Kit homes are growing in popularity and could play a major part in the rise of custom built homes. One of the biggest problems with kit homes in the past has been the availability of land. Take that problem away and there’s no reason not to look at a construction method seen as a more efficient way of building than bricks and mortar.
When people think of kit homes they think of Huf Haus, which up to now has dominated the UK kit home market. One of the popular misconceptions is that custom homes are just for the wealthy. It’s simply not true, some are available from as little as £50,000 making this form of construction an option to everyone – from first-time buyers to people who are downsizing in retirement. There are now many UK start-ups challenging the dominance of Huf Haus with individually designed and digitally manufactured homes. The fall in the pound since the EU referendum has helped these start-ups enormously.
This means that lenders will need to be more flexible, with a tailored approach to this growing trend in housing. Those unable to be flexible in their lending procedures will struggle to support brokers and their customers effectively in their attempts to service the demand.
Be ready for the future
I suspect we are going to see more mortgage applications for custom-built houses. In essence, the requirements will be similar to a self-build mortgage, where funds can be drawn down in stages. The challenge will be in the unique design and the difficulties involved in valuation. However, for flexible lenders with experience in self and custom build mortgages it will just be another day at the office. We believe custom-build is going to be a growing segment of the market and one which will experience significant growth over the medium to long-term.
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