The government unveils a boost to self-construction…
The government has launched a new equity loan program for the self-build market.
The Help to Build scheme aims to help thousands of people in England get onto the property ladder by securing 95% mortgages so they can build their own homes.
Backed by £150million of government funding, the Department for Levelling, Housing and Communities said Help to Build will enable people to overcome prohibitive mortgage costs to build a home with just a 5% down payment – by assuming they can find land and get planning permission.
It follows an independent review by South Norfolk MP Richard Bacon into ramping up construction of detached and custom homes, which suggests how the sector could deliver 30,000 to 40,000 new homes a year.
He said: “Making it easier for people to build or commission their own homes helps promote a more diverse housing market with more real choice and control for consumers.
“There is clear evidence that involving people more in housing decisions helps deliver better designed and built homes that are greener and cheaper to operate and that communities are happier to see built. I look forward to working with the government to move this important agenda forward.
Housing Minister Stuart Andrew added: “Through the Home Building Assistance Scheme, we will help thousands more people gain access to home ownership by giving them the opportunity to build homes that are perfectly suited to their needs and in the communities in which they wish to live.
“This innovative program will build on our work to break down barriers to homeownership, create new jobs, support the construction industry, and kick-start a self-build and custom-built revolution. .”
Candidates will be able to borrow between 5% and 20% of their costs across England – and up to 40% in London through a government equity loan.
Total building costs cannot exceed £600,000, or £400,000 if the land is already owned, and applicants must live in the property as their primary residence.
Borrowers will have three years to build their home and will need planning permission before obtaining government and bank financing.
Similar to the purchase assistance program, the equity loan is interest-free for the first five years, but charges will apply from the sixth year.
The interest will be 1.75% of the amount of the equity loan borrowed and will increase each year in April by the consumer price index plus 2%.
Andrew Craddock, chief executive of the Darlington Building Society – the program’s first participant – said: “Self-build is not just for the wealthy, and Help to Build makes it more convenient and accessible than ever for people build their dream house.
“This system also opens up opportunities for first-time buyers. It’s a fantastic example of the market changing with the times and people’s changing wants and needs.