Government Help to Build Scheme Aims to Encourage Self-Builders

Many people in the UK dream of building their own home but realise that financing a scheme is fraught with problems. A new Government initiative aims to change that perception and give house buyers the opportunity to design a home to suit their individual needs and housing.

The Help to Build scheme, announced earlier this year, is a £150 million Government fund set up to encourage self-building by reducing the initial costs. Potentially of interest to first-time buyers and those on lower incomes, its aim is to help more people onto the property ladder and increase the number of houses being built. 

The UK lags behind Europe where self-build and custom-made homes are common, with serviced plots widely available to give buyers a choice over what type of house to build. Help to Build sets out to give UK house buyers and developers similar options and make self-building easier and more affordable. The project applies to custom-built homes ordered from a specialist firm as well as to houses built from scratch.

Self-build homes have been identified as one route towards alleviating the UK’s housing shortage and the intention is to see better quality homes built, more quickly and often with green credentials. The Government is also allocating £2.1 million in funding to help communities decide what sort of development they want and where it should be sited. The aim is also to create good quality serviced land ready for building to start and to encourage the initiative.

Details of the scheme 

Participants will take out a Government-backed equity loan, similar to that offered by the Help to Buy scheme. This will enable house builders to obtain a self-build mortgage with a 5% deposit rather than the usual 20% deposit required by lenders: a number of major lenders have signed up to the 95% mortgage guarantee strategy.

The theory is that as less funds are required upfront, more cash is available for the build. Details are yet to emerge regarding repayment of the loan; the scheme may operate on the same lines as Help to Buy does, with participants starting to pay interest on the loan after five years with the equity loan either repaid when the house is sold, or the mortgage is paid off.

Help to Build is only available in England so far and it is not yet clear if there will be an upper limit on the value of a project.

Housing boost

Minister of Housing Robert Jenrick said that the Government’s aim is to make building their own home an option for thousands of people who have previously ruled it out. 

Help to Build aims to incentivise the sector and promote the construction of between 30,000 and 40,000 new homes a year: just under 16,000 self-built homes were created in 2020. The initiative is also aimed at helping small and medium sized building firms which are ideally placed to grow the custom-build sector rather than the major building companies.

The Bacon Review

Richard Bacon MP, Chair of the All-Party Parliamentary Group on Self-Build, Custom and Community Housebuilding and Place-Making, was tasked with reviewing ways of scaling up delivery of self and custom-built homes. His report, issued in August 2021, identified potential for growth in the sector. The review received Government backing and made six recommendations:

  1. A greater role for Homes England including setting up a new Custom and Self-build Housing Delivery Unit to help create serviced plots for individual needs.
  2. Build a self and custom-build show park to highlight the concept and simplify relevant legislation.
  3. Create more opportunities for communities to build, such as through a self-help housing programme and a `plot to rent’ scheme.
  4. Promote green homes and housing and more use of Modern Methods of Construction (MMC).
  5. Align custom and self-build changes with planning reforms including making changes to Right to Build legislation.
  6. Resolve tax issues to ensure parity between self-build homes and speculatively built homes.

Help to Build is expected to open to applications from late summer 2021; further details about the scheme are due to come from Government later in the year.

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