UK lagging behind in self build market

At present, the UK self-build market lags behind other European countries; with around 12,000 self-build homes delivered per year it accounts for 7.6% of the new housing supply. This compares to Hungary (52%), France (38%), and the Netherlands (10%).  The Government's stated aim is to double the output of self-build housing from 100,000 to 200,000 over the next decade.

The self-build market requires significant further structural and cultural change if it is to become a conventional housing option within the next decade, according to the Build-it-yourself Report from Lloyds Banking Group in partnership with the Centre for Housing Policy at the University of York.

The key findings were

• There is potential for growth in the self-build sector, but it is too early to conclude that the sector is yet on a growth trajectory or the likely extent of any growth.
• If private sector organisations and housing providers are to be convinced of the demand and cost-effectiveness of self-build the Government must signal its ongoing support for the key initiatives beyond 2015.
• The role of local authorities is pivotal in delivering a change in volume, but they continue to operate in isolation, do not always see self-build as a priority, and there is little sharing of experience.
• Self-builders are primarily older and affluent, enabling them to draw on equity, savings, and mortgage loans to fund the build costs. As such easing access to finance for less affluent and younger households is fundamental if a step-change in volume is to be achieved.

Self-build remains a highly bespoke activity, with considerable variety in the way it occurs. It can often take up to two years to access land and, with numerous design, construction, and funding methods available, it can take a further two or more years to complete a build.

The average self-build project costs (including land) £255,543, and the self-build market is currently worth around £3.6bn per year.

The report shows that self-builders tend to have higher incomes and/or higher housing wealth and that younger, lower income households are infrequent builders.

Current initiatives making a difference

Led by developers, local authorities, and housing associations there is currently some impetus in the market, with new models of group self-build delivery and multi-plot individual schemes emerging.

There is evidence of their success in helping self-builders overcome problems such as limited experience and access to land, and also in the provision of project management support and help with securing planning permission.  However, many are ‘pilot initiatives’ and it is unclear as yet which approaches have the capacity to deliver volume.

Stephen Noakes, Mortgage Director, at Lloyds Banking Group, says: "The recent Government-led initiatives have been encouraging, but they need time to work and if the outcomes are to be successful then these activities need long-term support.

"If the sector is to grow and become part of the mainstream market then more work needs to be done in terms of sharing information and standardising practices. We need to see more coordination between both national and local government and the lending industry if we are to achieve this.

"On top of this, a finance industry-wide working group would help generate a greater understanding of the risks and could encourage more lenders to enter the market. This would then increase the supply of accessible products which can be tailored to the needs of self-builders and the different models of self-building, boosting financial support for the sector."