Last month, the government published its delayed Housing White Paper, which confirmed its commitment to custom build homes as a vital part of the solution to the housing crisis. The paper had a lot to say to get the nation building, including:
“Beyond feeble” was the response from the Shadow housing minister John Healey. So at Custom Build Strategy we thought we’d use the paper as an opportunity for the sector to reflect on the paper, from a custom homes angle.
The White Paper makes it clear that the government is going to make it easier for people to build their own homes. Not least, the government announced that it will be supporting NaCSBA’s Right to Build Task Force to help local authorities bring forward custom and self build sites.
Overall, the package offered in the White Paper will make sure that land gets to market – and land is the key issue that needs to be fixed to make it easier for people to build their own home. And government has said that if none of this works, it will introduce more legislation.
With windfall sites, the government said that it has the intention to change national planning policy. This is for small sites, from 1-10 plots, that are outside of existing settlement boundaries, or within settlements that don’t have a boundary.
At the moment, the only way that those sites could be brought forward for housing is if they are promoted into the local plan – and that is a long and slow process. New legislation would mean these windfall sites could be brought forward and planning applications made for housing, even when they are not allocated in the local plan.
The White Paper also makes it clear that the exemption from the CIL for custom and self builders will be extended. This could be worth on average 14k per custom and self build home.
CIL is a tax levied by town halls for affordable housing and infrastructure and other costs related to new development. NaCSBA fought hard to get this exemption for custom and self builders and it’s great to see government backing NaCSBA and the industry by confirming that the CIL exemption is at least extended until they review the whole system for town hall taxes for both infrastructure and affordable housing
Alongside the problem of sourcing enough plots, there has historically been an issue of making sure there are enough mortgages available. To achieve the government’s ambitions of making custom and self build an affordable option for the many, not just the few, the sector must ensure that many more custom and self build mortgages become available. The White Paper sets out that the government will be working with the lending industry to make sure those mortgages are available.
New sources of supply are needed in the housing market. Custom and self build could unlock these, especially if innovations in terms of building at scale, in sustainable locations and to a proper masterplan are pursued.
The RTPI is a partner in the recetly-launched Right to Build Task Force that will help local authorities, community groups and other organisations across the UK deliver large, affordable custom and self-build housing projects.
With funding from the Nationwide Foundation the Task Force aims to help at least 80 organisations and projects over 3 years.
Potton is delighted that the White Paper challenges planners and local authorities to diversify the market, and this can be easily achieved by delivering custom and self build homes to meet the demands of Local Registers.
There is real opportunity to maximise the contribution that can be made from surplus public land, and windfall small and medium sites. These sites are often of little interest to traditional developers, but are ideal for providing small numbers of serviced plots for delivering self build homes, for which there is an increasing demand.
Potton is actively engaging in consultation with local authorities, government and communities to enable local plans to be influenced by the demand for custom build homes.
We are already enabling delivery of infrastructure works with the support of the Home Building Fund and certainly encourage the White Papers backing of small and medium sized builders to play a part in that process.
Potton has a long history of delivering quality designed homes tailored to meet customer demand. By enabling more availability of consented land, the White Paper provides a welcome challenge for us to play a real part in meeting the demand for custom build housing.
The government is losing patience with volume housebuilders who simply will not risk their profitable business model or boost productivity to build any faster than they want to, or feel they can manage, in current conditions.
The £3 billion Home Building Fund will help smaller builders, and now the White Paper makes it clear that custom build is an important part of the government’s strategy to solve the housing crisis.
Moving forwards, we would like to see the potential of over 25,000 new homes per year realised under these conditions created by the White Paper, within the next two years.
Using wood as a building material will help build these new homes faster, more affordably and with the limited labour resource currently available. Currently, the UK – and the construction industry specifically – are not on track to achieve set carbon targets.
But wood as a building material contributes to significant reductions in CO² emissions, as timber locks in carbon from the atmosphere, absorbed whilst it grows, and stores this in the built environment.
It’s hard to fault the analysis that concludes our current housing market is broken.
Diversity of supply, new players and enabling the wider construction sector, especially custom build, to help make inroads into addressing the housing shortage is welcomed. Support for Nacsba’s Right to Build task force and self build portal as valuable tools is pertinent too.
What’s not so convincing is that the measures will go far enough in delivering significant change. It feels like it’s more a small step for housing, in the right direction, than a giant leap.
Custom build is high profile – it has been identified as an avenue to help provide more homes in the UK, with government, local government and independent bodies actively promoting it in a variety of delivery methods.
Currently, building societies are under immense pressure with the level of business presented to them. My concern is that this volume, and the capital adequacy provisions lenders have to set aside, may lead to those already lending in the sector closing their doors in the future.
Recent guidance on risk management of stage payment lending for self build homes from The Prudential Regulation Authority (PRA) states that: “Societies are expected to consider protecting their position by requiring build-out insurance that will pay for completion, should the borrower (or developer) fail.” PRA, Paragraph 3.28
The industry urgently requires another provider of this style of ‘build-out’ insurance policy to come to market, as currently it would seem there is only one dominant provider. Some may even deem this as a monopoly within the sector.
In my opinion, a build-out’-style insurance policy to accommodate the PRA guidance may not be required in all instances. For example, the requirement to have such a policy evaluated may be adequate, depending on: a) full financial underwriting; b) the loan to value; c) contingency provision; d) cash project management; e) management of the construction of the build project, and; f) due diligence to be carried out on the financial standing of delivery partners.
There is a palpable sense of excitment following the White Paper. For the custom homes sector, it reinforces the legislative achievements of the last few years, but key now is to turn this framework into homes. The next major challenge is convincing the public to buy into the model, and the sector must work together for this goal, if it wants to build on the White Paper wins.