In 2018 we have seen a surge in the number of self-build enquiries at Saffron Building Society. Self-build and custom-build continues to attract attention in the media and from the general public. An Ipsos MORI poll suggested that one in seven Britons expect to consider building their own home, which would equate to around seven million people. This growth has obviously been encouraged by wall-to-wall coverage of property on TV and in the media. Kevin McCloud started wowing us with his Grand Designs back in 1999, and giving us all the belief that we too could create our own detached waterfront property and enjoy sunsets with a cocktail. However, there are other drivers pushing people towards self-build.
The rise of self-build
The 2017 Home Owners Survey reported that the quality of housing was a major issue. 57% of adults considered the quality of available housing to be a serious problem, up from 52% the year before. In addition, new builds are not winning in the popularity stakes, with almost twice as many people preferring an older home (49%) to a newly built one (19%). In a separate survey, respondents said that new homes were poorly built, lacking character or charm, and with smaller rooms. Obviously, it would be wrong to categorise all new builds in this way but it’s possible to see the trends.
The general public seem to be exposed to aspirational images of what they could have while being very dissatisfied with the housing stock presently available.
The rise of new entrants
In financial services, we’re all accustomed to hearing about new fintech companies shaking up the market and providing innovative new propositions. The construction industry is experiencing a similar revolution. In May, City AM reported on a company which is developing a new construction technique designed to solve current problems. The founders believe that three problems need to be addressed in the current market – affordability, sustainability and quality. Anyone able to overcome all three will be well positioned to free the UK market from its current restrictions.
The company manufactures parts off site, then delivers and assembles them in a location of the buyer’s choosing. The entrepreneurs believe this is the first time that modular housing has been supplied to a higher standard than the average new build, but at a lower price. This is achieved through the use of new materials, specifically ‘cross-laminated timber’ or CLT. CLT is increasingly being considered within the housing sector in the UK for its low environmental impact and versatility. And it’s particularly useful for modular or custom housing because it’s easy to modify.
When you have all the ingredients for change in place, a revolution can happen quickly. However, there is one obvious drawback.
What’s stopping the revolution?
According to City Metric, only about 10% of house construction in the UK is currently self-build. This is dwarfed by Europe, where the proportion is on average over 50%. Why is this? Many commentators usually jump on the fact that our densely populated island simply does not have the available space. However, both Belgium and the Netherlands have more people per square kilometre than the UK and City Metric believes that what’s holding the country back is more than just a question of land.
Britain differs from the rest of Europe in the way that planning occurs. Other than a few ‘permitted developments’ there is no right for landowners to develop their own land. In Germany for example this is a constitutional right. Britain has a planning system in which each new site can be contested. It’s a complicated area and the detail probably isn’t important for this article. However, the main point is that while planning consent for new homes is difficult, the government is looking at ways to speed it up.
The best example of this is the much heralded Graven Hill in Oxfordshire. Graven Hill is the brain-child of an entrepreneurial local council which has bought hundreds of acres of disused Ministry of Defence land, created the plots, the street layouts, the schools, nurseries and cycleways – in short they’ve created the foundations of a community. Buyers pick a plot and then design their own custom-built home, which gets fast-tracked through the planning system. Lots of councils are watching to see how the scheme develops. If it’s a success, and early indications are that everyone involved is benefiting from it, then the planning regulations could be freed up all over the country.
If this happens, the two biggest barriers to land and regulation come crashing down, and the way will be clear for more self and custom building.
What brokers need to know
There is a growing body of evidence to suggest that self and custom-built homes will assume an increasing proportion of the mortgage market. Specialism and expertise in this area may yield high returns in future if demand continues to grow. If you are unfamiliar with the intricacies and nuances of self-build, then it could pay to invest some time to learn more about it as part of your future plans.