07 Feb 2018

Chris Brown discusses the changes needed to drive custom build to scale

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Chris Brown discusses the changes needed to drive custom build to scale

The National Custom and Self-build Association (NaCSBA) does great work influencing Government, work that’s helped facilitate the system change necessary to unlock the latent demand for Custom Build and community-led housing.

This is working to deliver more homes, faster, by releasing the handbrake on the supply of the glacially-slow sales rates of the unloved, standard house types on identikit estates.

Some of NaCSBA’s latest thinking graphically presents the virtuous circle that Government needs to unlock. It communicates brilliantly the connectedness of the interventions required, while at the same time throwing light on Governments’ failures to complete this unlocking.

The beginning, and end, of this circle is the customer. The UK has both a limited culture and limited understanding of Custom Build and community-led housing in comparison to most other developed countries. This is simply because there hasn’t been much of it for generations.

Steps to change

The first step in correcting this is the political leadership laying the policy ground for this to change.

The NPPF policies on Custom Build were a good start, but these haven’t yet been effectively translated into the Planning Practice Guidance and the local plan policies that deliver the necessary allocations, with the exception of the Petersfield Neighbourhood Plan.

The next step would be for landowners or enablers to turn these allocations into serviced plots.

This is currently a struggle, because private landowners take a tax hit if they service plots themselves, while the few public land owners who understand the opportunity, like Cherwell, are just at the very earliest stages of experimenting with what works.

And, of course, a large slug of the developable land supply is controlled by a small number of big housebuilders who don’t want the competition.

Once there is a planning allocation for Custom Build and a willing land owner, the next challenge is finance.

The problems with this include:

  • Help to Buy, which supports a large proportion of new build speculative housing, isn’t yet available for Custom Build,
  • public sector-provided development loans are much more expensive for community groups and enablers than for the big housebuilders, and
  • private finance and mortgages aren’t readily available at competitive prices because the volumes and returns aren’t yet there.

However, NaCSBA has a number of initiatives in this area, including standardised mortgages for community-led development, to make it easier for private lenders to adapt their processes.

Scale drives cost efficiencies

Once the planning, land and money are in place, we need the volume that will allow the home manufacturers to deliver a customised home at close to the cost levels the big builders can achieve. This means that scale will give access to buying in bulk from many of their suppliers, and delivering standardised products.

To achieve these scales, the industry needs financial incentives, as it is effectively still in a start-up phase. The Community Infrastructure Levy exemption is currently proving to be insufficient due to its limited quantum, geographic coverage, purchaser risk and complexity. And VAT and SDLT are still problematic.

Planning allocations and public land disposals are likely to be the most effective route to build scale in the sector.

Virtuous not vicious

The reason this is a virtuous circle, and not a vicious one, is that success in the four steps will deliver more, and better, homes and places more quickly, thereby stimulating further demand and accelerating the sector around the circle again.

We can see this working in many other countries, so we know it works, the challenge is how to get there in the UK.

This needs a big joined-up push even just to get to a level playing field. And initially, to get the industry going, the sector needs to be injected with a big dose of competitive advantage. Without Help to Buy, for example, scale won’t be achieved.

These kinds of problems are hard for Government. They require work to be aligned across departmental boundaries and levels of Government. The levers to achieve this are often weak, the understanding is limited and the opposition from vested interests considerable.

Which is where NaCSBA comes in, punching well above its weight. It has great advocates in Parliament, including Richard Bacon MP, and cross-party support due to the clear public enthusiasm for the route.

This public support is evidenced time and again, both in surveys on the ground among committed community groups, as well as in planning forums and through the viewing numbers for the various TV series on the subject.

All this communicates to Government the practical steps that would be effective in turbo-charging the virtuous circle.

It’s a real David and Goliath battle though. The House Builders Federation is funded by almost all the biggest house builders, who also provide financial support to politicians and political parties. But NaCSBA isn’t on its own. There is the potential for alliances with the community-led housing sector and the potential to create a popular Right To Build movement.

I’m not advocating a new, single issue political party, although examples like the Women’s Equality Party are interesting. This is because, while they show how difficult it is to break the current duopoly (in England), they also demonstrate how, if the stars align, they can be part of a very significant culture change. This is what’s currently happening in gender equality.

So that’s the challenge, to create a political movement capable of changing public culture and directing effective Government action, to accelerate the virtuous circle to deliver more and better homes and places across the country.

Chris Brown is Executive Chairman of Igloo Regeneration

 

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