Insight – will Help to Build really help to ease the housing crisis?

5 May 2021 | Investment

“There are very few specialist custom-build developers currently operating and this is an exciting venture to be involved with, but what we need is venture capitalists to take on delivery of buying sites and provide the infrastructure,” Winnard commented.

“In addition, self-build plots need to be delivered – not just on parcels within housing estates, but also smaller bespoke sites. Self-builders are looking for attractive sites and a corner within a generic housing estate is not the answer.”

Another detrimental factor, according to Winnard, is that the UK doesn’t currently have planning consents targeted to deliver custom builds.

“For this to work, the right planning consents need to be agreed. In theory it’s a great idea, but practically, the only way it will work is if planning policy makes it easier to achieve planning, similar to rural exception sites,” Winnard added.

“It will be interesting to see how this one plays out as we see the initiative move forward.”

Winnard says the government has realised that its target of building 300,000 homes a year is unlikely to be reached through the conventional manner of RSLs (registered social landlords) and housebuilders.

“Covid and lockdown has taught us that we may need different housing layouts. Room for potentially two offices if both are working parents, bigger gardens and so forth. In fact, we are no longer bound geographically by our employer’s office location,” Winnard stated.

“Pandora’s box is truly open. We are experiencing a housing boom, whilst purchasers are focused on buying a new property for their needs, in locations they want, whilst taking advantage of the stamp duty holiday.”

Winnard says that, when asked, a high percentage of people have the dream of building their own home, which explains the popularity of TV shows such as Channel 4’s Grand Designs, the Kevin McCloud-fronted programme which has been going strong since 1999. 

“In fact, 55,000 people are signed up on self-build registers and already circa 16,000 self-build units are built every year,” Winnard claimed.

“The government want this increased to 50,000 a year and this is possible. Not only will it increase employment, but it has the mechanics to assist delivery of reaching the set housing target.”

Winnard has some words of warning, though. He says bespoke self-build houses are more expensive to build and not for the fainthearted – ‘budgets are often exceeded, and it can be a stressful exercise with many unforeseen issues’.

“Not everyone has the skills to either go through the complex process of achieving a detailed planning consent, tick off the myriad of planning conditions, [or] the ability to deliver service connections, etc,” he said.

“Custom building needs to evolve with specialist enablers to purchase sites and deliver the infrastructure. Planning policy now needs to provide the hook for more consents in suitable areas, where self-builders wish to live. Policy similar to rural exception sites, where local people can build their own home, is a thought.”

Winnard says that the government, by assisting with 5% self-build mortgage deposits, will improve the chances of those who want to build their own bespoke homes.

“This in itself is ground-breaking and hopefully the planning system and developer specialists will now step in,” Winnard concluded.

Separately, Ben Dyer, chief executive of software company Powered Now, has warned that the scheme could be a failure without drastic changes.

Recently announced by Housing Secretary Robert Jenrick, the Help to Build scheme has been designed to help more people build their own homes, and is made up of a number of elements including:

  • A new ‘Help to Build’ low deposit mortgage scheme supported by over £150 million in funding.

  • Funding for local authorities to develop public land for custom and self-build housing.

  • A review into how delivery of custom and self-build housing can be increased and accelerated.

  • A law review to enable more people to access plots in their local areas.

Dyer says the new Help to Build mortgage is very welcome news, with the requirement of only a 5% deposit making it similar to the Help to Buy initiative that he claims has ‘proved to be incredibly popular’.

The mortgage is also backed by a government equity loan and should help open up home building to a part of the market that simply couldn’t consider it before, Dyer adds, especially those trapped in Generation Rent, young professionals, first-time buyers and those on lower incomes.

“While a lot of people would love to build their own homes, one would think that many in the trades would welcome the arrival of the Help to Build scheme. However, there are many caveats that come with this,” Dyer commented.

“Each of these initiatives, the government say, are there to help solve an issue that prevents people building their own home. Unfortunately, they missed a major one; a review of the UK’s archaic planning laws.”

Dyer says the disastrous Green Homes Grant scheme also casts a long shadow. “The recent failure of the Green Homes Grant is still a little raw with the trades. The scheme was heralded as a green revolution – the reality, it was an unmitigated disaster. Just as a reminder, this was both started and unceremoniously scrapped all in the last 12 months, thanks to being too complicated, too prescriptive and too late.”

He added: “One might be forgiven for assuming that the those behind the policy responsible for the latest Help to Build scheme has likely never tried to get planning permission for a new build. If they had, they would quickly discover why so few homes are built by small and self-builders.” 

Dyer argues that, unless you are incredibly lucky, almost all proposals for new builds are opposed by local residents.

“As local authority planning departments well know, if merely the fact of having opposition prevented building, then nothing would ever get built. But local residents know this, so they tend to become quite creative,” Dyer said.

“In fact, a large number of them turn out to be surprisingly concerned about the welfare of the local wildlife, such as bats and newts. The poor newts might after all be disturbed by the new development.” 

Dyer continued: “So, while we broadly support what the government is trying to achieve, the truth is that doing something practical about planning laws and the objection process would achieve more. On its own the new Help to Build scheme seems a little toothless.” 

He concluded: “Maybe the government should provide some funding for new bat and newt habitats? Creating new environments for protected wildlife while skipping the expensive newt and bat surveys would actually lead to both more newts and more houses. But is that too practical?”

This post has originally been featured in Property Investor Today.