The Highland Self Build Loan Fund (HSBLF) has been set up by the Scottish Government in recognition of a lending gap for self and custom builders. Overseen by The Highlands Small Communities Housing Trust (HSCHT), the two-year pilot scheme will allow self builders to reach completion of their homes, at which point they can access a traditional mortgage for the life of the loan.
The £4 million fund was announced by Margaret Burgess MSP at the Rural Housing Scotland Conference in April. Families will be able to borrow up to £150,000 in agreed stage payments, and the scheme is open to part and full home owners who will need to sell their interest in their property to access the fund.
As a form of housing provision, self build has been falling in the Highlands from 1,845 completions in 2007/2008 to 833 in 2012/2013, although it has stablised just below 1,000 homes a year. HSCHT points to a lack of specialist mortgage finance provision as being a significant factor in the decline, and the fund has been introduced as a measure to address this.
“Self and custom build offers an important means of increasing housing supply while allowing customers input into the design of their new home. We understand the lending difficulties experienced by households looking to build, and that’s why we are piloting this £4 million self-build loan fund, which we will monitor and review following the pilot’s two year lifespan,” said Burgess.
The fund is a revolving one, which means that projects with shorter build cycles will be favoured, in order to return the money to the pot so it can be lent out again, supporting a greater number of projects. Analysis of the pilot will be used to produce evidence of demand and inform future policy making with regards to self and custom build across Scotland.
The HSBLF is now open, visit HSCHT for more information about how to apply.
Credit: Rhys Asplundh/creativecommons.org/licenses/by/2.0
While great news, what’s notable about this fund is the very deliberate inclusion of custom build. The Highlands has a strong tradition of self build, but custom build tends to be focussed south of the border due to different market influences. It would be good to see it take shape in Scotland, especially if it’s used as way to bring on greater numbers of projects quickly, which is where its strengths lie.
However, if all participants borrow the maximum £150,000 the fund can only bring on 26 projects at a time, and I’m not convinced that two years is long enough period to reflect demand. This is especially the case in a revolving fund where a good uptake will block further lending until the completion of the first projects. In which case, it can only provide limited evidence of demand.