The Government has announced a new “help-to-build” self-build mortgage scheme which aims to encourage the public to consider building their own homes as an option, rather than buying an existing one.

£150m in funding for self-build mortgage

This the part of the press release from the Government about the scheme:

New plans supported by over £150 million in new government funding will make it easier and more affordable for people to build their own homes, the Housing Secretary Robert Jenrick has announced today (24 April 2021).

The ‘Help to Build’ scheme will ensure that self and custom home building can become a realistic option to get onto the housing ladder through lower deposit mortgages.

Lowering the required deposit will free up capital, so people can build the home that they want and need whether it’s a commissioned, made to order home, or a new design from scratch. The scheme will provide an equity loan on the completed home, similar to the Help to Buy scheme.

Made to order homes allow people to customise the home they want based on existing designs. This could include more office space, or a particular design to support a family’s requirements including for disabled or older people.

Self and custom build could deliver 30-40,000 new homes a year: a significant contribution to the country’s housebuilding ambitions.

The scheme is part of the government’s wider Plan for Jobs as the new plans will also benefit small building firms. SME builders account for 1 in 10 new homes and the scheme will help scale up the number of self and custom build homes built every year.

Housing Secretary Rt Hon Robert Jenrick MP said:

Building your own home shouldn’t be the preserve of a small number of people, but a mainstream, realistic and affordable option for people across the country. That’s why we are making it easier and more affordable – backed by over £150 million new funding from the government.

The scheme we have launched today will help the thousands of people who’d like to build their own home but who’ve not yet considered it or previously ruled it out.

Our plans will help get more people on to the housing ladder, ensure homes suit people’s needs like home working or caring for relatives, whilst providing an important boost to small builders and businesses too.

The Prime Minister has commissioned Richard Bacon MP to lead a review on how we can scale up the delivery of self and custom build homes. The review will report its findings and recommendations in the summer.

You can read the full release here:

The scheme is not yet live and there is no start date as of yet for the scheme.

At first glance, this does look like something similar to the Green Homes Grant. Small builders will likely have to apply to be part of this scheme. Potential homeowners will then have to search for builders that are taking part in the scheme who will then work with them to plan their home. This would be how the Green Homes Grant worked, where homeowners needed to find accredited installers of home improvement measures in order to be able to qualify for the grants available.

In principle, I like the basis of the idea. Allowing more people to build their own homes via a self-build mortgage that would actually meet their requirements seems common sense to me. Rather than buying something that already exists to then spend even more money on adjusting it to their own taste. An additional 40,000 new homes per year due to the scheme would also help in a significant way to meet the growing demand for homes in this country. My only fear is how the scheme will be run. If it’s as difficult and complicated as the Green Homes Grant, then small builders may well be put off taking part. That was the case for companies in the GHG. Small builders need to be able to join this new scheme in a simple, easy to understand manner so that potential homeowners have lots of choices when it comes to choosing their builder. Make the scheme too complicated and it will suffer the same fate as the GHG. Hopefully, the Government will have learned lessons and adapted this new scheme to work better.

One to watch.

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