help-to-build-scheme

`Help to Build’ encourages self-builders

This article explains the Government’s Help to Build scheme, an initiative to encourage the self build market and boost housing supply. It investigates:

  • the background to Help to Build
  • details of the scheme
  • eligibility requirements
  • how to apply
  • aims of the scheme

To find out whether this scheme could help you to build your very own home, read on!

Background to the Help to Build scheme

Many people in the UK are aspiring self builders who long to build their own dream home, but realise that financing such a scheme is fraught with problems. For them, the new Government equity loan scheme, Help to Build, is welcome news; it aims to give self builders who want to custom build a home, the opportunity to do so.

The Help to Build scheme, announced in 2021, is a £150 million Government fund set up for the next four years to encourage custom and self builders by reducing the initial build cost. Potentially of interest to first-time buyers, those seeking low deposit mortgages and people on lower incomes, the Help to Build scheme aims to offer a route onto the property ladder and increase the number of houses being built.

The UK lags behind Europe where self build homes are a national custom, with serviced plots widely available to give buyers a choice over what type of house to build. The Help to Build Scheme sets out to invigorate the custom and self build market by giving UK house buyers and developers similar options to make self-building easier and more affordable. The project applies to custom build 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 homes being built to people’s specific needs, more quickly and often with green credentials. The Government scheme 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.

Build a home to suit your individual requirements

Details of the scheme 

Participants will take out a Government-backed equity loan, similar to that offered through the Help to Buy scheme. This will enable house builders to obtain a self build mortgage with a 5% deposit rather than the usual required deposit of 20%. The theory is that as less funds are required upfront, more cash is available for the build.

The equity loan can be between 5% to 20% (up to 45% in London) of the total estimated costs of buying the land and building the house. If eligible, participants can spend up to £600,000 to include the cost of the land, with a maximum of £400,000 to be spent on the build cost. Upon acceptance of the offer of an equity loan, participants have three years to buy the land and build the house. The self build mortgage pays for the land and set up costs and the lender releases funds at stages during the build.

On completion of the build, participants get their equity loan and start to pay fees for it; the government pays the mortgage lender the equity loan amount offered and the self build mortgage will usually revert to a repayment mortgage. Interest is paid on the equity loan from year six. The payback amount is calculated on the value of the house at the point of sale and the loan must be repaid at the end of the term, normally 25 years.

Applications are expected to open this winter and the government scheme will run for four years. More information about building your own home is contained in the Help to Build prospectus which has now been published; it gives details and a link to register interest; those signing up will be contacted about when applications can be made.

Eligibility requirements

  • participants must be aged 18 or over and have a right to live in England
  • they must live in the new home as their only home
  • they must secure a self build mortgage from a lender who is registered with the Help to Build scheme
  • Homes England will carry out eligibility checks to ensure participants can afford the equity loan based payments
Create your own design

How to apply

  • secure a self build mortgage from a registered lender
  • apply for Help to Build through Homes England
  • on submission of a successful application, an equity loan offer will be made based on the estimated cost of the land and the build cost
  • when the house is complete, Homes England will pay the equity loan to the lender

Aims of the scheme

Announcing the initiative, former 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 self build market 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. One of the key aims is to build more and better homes in the UK and give greater customer choice. A good take-up for the scheme could also increase the amount of affordable housing which is lacking in many local authority areas. The initiative is also aimed at helping the task force of small and medium sized building firms which are ideally placed to grow the custom-build sector, rather than the major building companies.

Is this scheme for you?

If you are keen to build your own home and have a site in mind, you will probably need to have ecological surveys carried out before applying for planning permission. Arbtech https://arbtech.co.uk/ are your best asset when it comes to getting planning consent; we carry out a range of protected species and environmental surveys and cover the whole of the UK. Contact us for more details.

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