I’ve been spending time with our prospective Custom Build customers, our marketing and sales team and our Home Manufacturer partners this week at Heartlands in Cornwall. And it’s been fascinating!
We’re still very much in learning mode as we bring forward the Dutch-style Custom Build model, under our HomeMade brand, with HCA for Carillion Igloo at Heartlands.
And we’re learning loads. We’ve found that lots of our skills from our regeneration business are relevant. The neighbourhood and community is a critical part of what customers are buying into.
We’re lucky in Cornwall in having a location at Heartlands, in the parish of Carn Brea. It’s set in beautiful parklands, with the obligatory cappuccino serving café, in a World Heritage Site overlooking the uplands of Carn Brae itself.
And it ticks all the basics of good local schools, supermarkets, surgeries, broadband etc. With its central location in Cornwall it’s also really accessible to both north and south coasts which is a selling point none of our other projects can claim!
To balance all of that it is competing with some of the country’s most beautiful (and expensive) coastal villages so it has to offer something special.
And it is quite a small market compared with the big cities with relatively small numbers of people moving annually and quite a bit of competing speculative standard housetype supply, some of which are much improved on the house builder output of twenty years ago.
The biggest challenge, as we expected, is how to communicate what Custom Build is to potential customers. It is not just that they have never heard of it, it’s also that when they do hear of it they assume that it’s self-build.
However, the flip side of this is that few people have heard of Custom Build, so they haven’t been confused by the misuse of the term by Government and in parts of the industry.
So we get a clear run at explaining it, but that is still hard on a limited marketing budget for a small project, when you aren’t quite sure who your potential customers are.
We’re getting thousands of people interested though and now have sufficient enquiries to start doing both qualitative and quantitative research to help us refine our inevitably somewhat scatter-gun initial marketing.
We’ve taken on some specialist help in this area to help us better understand all of this, something that we haven’t done in our mainstream business, and it is really paying dividends.
And some customers are definitely prepared to move further and make more locational trade-offs for the dream of designing their own home, paired with a simple one-stop delivery process.
Our perception of early customers as pioneers has been confounded though. These people are pioneers but they don’t see themselves that way. They are just following their dream.
This makes them a little bit more prepared to put up with things that a housebuilder’s customer buying a speculative house type wouldn’t put up with. But they really don’t see themselves as heading off into a dangerous land in a covered wagon.
So key challenge number one is how to explain Custom Build within the constraints of the Rightmove channel. Answers on a postcard please! We definitely haven’t mastered this one yet but we are proceeding through a process of quantitative experimentation to see what works best.
Challenge number two is how to technologically integrate the customer journey so that all the participants can see where the transactions and co-design they are involved with are up to. This includes us, agents, independent financial advisors, lawyers, home manufacturers and customers.
The systems we usually use don’t quite do this task in the way we all want so we’ve got some rethinking to do, some more investment to make and some behaviours to change.
Challenge number three is how to compete with the Government-subsidised speculative house builders whose business models are heavily reliant on Help to Buy, which accounts for nearly half of all sales for some of the biggest builders, which isn’t available to Custom Build.
At Heartlands our phase 1 infrastructure contract is nearing completion with the first seven plots now serviced and the initial plot shop sales event planned for May, so no doubt we’ll be learning even more lessons then.
The first prospective customers are awesome people and the satisfaction the team will get delivering their dream homes is already clear.
I suspect one of the many differentiators for Custom Build will be the satisfaction everyone will get from seeing each customer’s dream realised.
Chris Brown is Executive Chairman of Igloo Regeneration
The question of whether custom build qualifies for Help to Buy is an interesting one, and one that is very much reliant on definition.
Officially, custom build requires the pre-sale of a plot, ie exchange before the build starts and completion at Golden Brick. This is to enable genuine custom build to qualify for CIL exemption, and stop larger housebuilders calling their homes cusotm build, and thereby avoiding CIL.
This is why we really do need solid definitions for the terms.
But the issue of Help to Buy with custom build is not straightforward. The Help to Buy Buyer’s Guide says: “You cannot purchase a Help to Buy property if you own land with resisidential planning use.” (page 10)
It is also unavailable to those buying a second home, which is often the case for custom builders who can end up with two homes for the duration of the build, prior to selling their original dwelling.
The HCA says that Help to Buy can be used for custom builds – but only at the point that the units are completed. By default, this means they’re not genuine custom builds, but rather some form of enabled build.
Using Help to Buy at completion will leave a shortfall during the build, with the work-around that most of the plot receipt is deferred until completion, which again prevents the home from being a true custom build. Clearly, there is an issue here.
One sector professional I spoke said that government needs to offer Help to Buy from Golden Brick rather than completion, saying that “…this would put custom build on an even footing with volume housebuilders.”