Written by Tony Hall, Head of Business Development at Saffron
Every year, around 13,000 people in the UK choose to build their own home1. This makes the self-build and custom housing sector similar in size to some of the country’s larger national housebuilding firms, such as Bellway and Taylor Wimpey, based on housing completions2.
Yet, the UK still lags behind many other countries, including those in Europe where self-commissioned housing often accounts for a third of the total housing supply. In some countries, such as Germany, it is even the dominant method of delivering new homes (55%)3.
Prior to the global pandemic, the number of self-builds in the UK was on the rise as more people began to consider it a solution to their housing needs. However, despite a government-commissioned independent review aimed at increasing and simplifying the self-build process, the sector has seen a dip in applications.
Reversing this trend would not only support the UK government’s house building targets, but it could help make the UK’s housing stock greener and of superior quality, all while bolstering local economies. So, what should consumers consider before taking on a self-build project?
Custom-build vs self-build
There are two distinct pathways for consumers to choose from when embarking on a homebuilding project: self-build or custom-build. Each offers unique advantages.
Self-build projects are often seen as an attractive option by those interested in personalisation, as the owner usually takes a hands-on approach, overseeing the design of the build, engaging with builders and contractors, and ensuring regulatory compliance.
In contrast, custom-build projects involve a professional developer who handles all practical aspects of the build. The homeowner’s primary role is to guide the design and final touches. While custom-build projects require a higher investment, you do get professional oversight.
Mortgages available for both types of build differ from standard products in that the funds are released in phases to pay for each incremental stage of construction. This approach reflects the lender’s risk management, as the property’s value increases through construction. Custom-build mortgages are generally seen as lower risk as the project is managed by an experienced developer who can offer true expertise and reassurance.
The benefits
There are a number of reasons why people may choose to self-build or custom-build their home, including greater flexibility around the location and design of the build, as well as control over the types of materials used in the construction process.
In many instances, this is helping contribute to greener, and better, housing stock. Those building their own homes will make choices that favour the environment and local communities. This is evidenced by research commissioned by the Right to Build taskforce, which showed that custom and self-build developments produce more than double the beneficial local economic impact of mainstream housing, while CO2 emissions from these homes are between 7% and 43% lower4.
Moreover, those building or designing their own home can tailor it to their lifestyle choices and individual needs. Rather than moving into an ‘off-the-shelf’ house, homebuilders have the freedom to make their own decisions about every aspect of the property.
Additionally, one of the biggest selling points is the savings that can be made. Some smaller self-build projects can cost under £100,000 depending on the materials being used and whether the homeowner is prepared to take on more of the work themselves.
As many young people see property prices increase and feel the impact of the cost-of-living crisis on their ability to save, buying existing homes can seem unattainable. Self-build projects could present a more economical route to homeownership.
The need-to-knows for aspiring homebuilders
Despite these numerous advantages, a homebuilding project can feel like an intimidating undertaking, with concerns around mortgages and practical decisions deterring potential builders. For instance, while the most prominent costs associated with self-building include materials, labour, land, architecture and planning permission, there are several other costs that potential homebuilders should keep in mind before beginning a project.
These range from site surveys to ensure land is safe for construction, to landscaping to get the site ‘build ready.’ Some areas may also require an archaeological survey to be carried out before any construction projects can take place. Other costs might include connecting utilities, compensation owed for the closure of roads during construction, and provisions to cover any potential project delays.
However, the process is often more straightforward than most expect thanks to the vast array of professional advice available to cover the financial and logistical aspects. Not only are there a growing number of people who have actually built their own homes, and who self-builders can connect with online, but equally, lenders are becoming more familiar with self and custom-build. There is now a wide array of products on the market designed to specifically meet the needs of this kind of borrower. For example, Saffron offers specific products for those looking to buy a plot of land to build a new house or refurbish an existing home.
With this in mind, there is more opportunity than ever for homebuilders to take advantage of the many benefits that come with building or designing their own homes. Although a lot of hard work is involved, the cost-savings for those who choose to self-build can also be considerable, along with the deep personal satisfaction derived from seeing a self or custom-built home through to completion.
