Proposals for thousands more custom and self-built (CSB) homes a year to boost the UK’s housing supply are currently being considered by the government.
A review published by Conservative MP Richard Bacon and commissioned by the government found demand for CSB homes sits at a minimum of 30,000 a year, but “could conceivably be as high as 100,000 homes a year”.
The government’s Help to Build equity loan scheme, announced in April, committed £150m to delivering 30,000 to 40,000 CSB homes a year.
But the review, published over the weekend, suggested demand could reach more than double this.
“This is also reflective of the general population survey evidence and would also be more in line with what occurs in other developed economies across the world which suggests demand as high as 120,000 homes a year,” the review said.
Self-commissioned housing is much more common overseas. In Germany it is the dominant method of delivering new housing (55 per cent), according to the review.
“At one extreme, people may find a plot and undertake every element of the build themselves – a home that is literally self-built,” Bacon explained.
“At the other extreme, people may select a model home from a catalogue and have it erected for them on their chosen serviced plot, which they have purchased from a landowner or builder.”
The review also highlighted the “small but quite mature CSB mortgage market” is mainly offered by smaller building societies and “has a lower default rate than for conventional mortgages.”
Despite these benefits, it estimated CSB houses in England currently make up a mere 5 per cent of new supply. Whilst self-builds are “overwhelmingly dominant” within this figure, Bacon said “custom builds probably have the greatest potential for scaling up”.
Around a third of the general population are “interested” in self-built housing, with a further 12 per cent saying they are “very interested”, according to a recent YouGov poll.
Nationwide research suggests the demand is even larger, particularly among young people, with 81 per cent of 18-24-year-olds surveyed wishing to commission a home at some point in their lives.
Bacon’s review has been “warmly welcomed” by housing secretary Robert Jenrick.
“We will consider it fully and respond to the recommendations in due course,” he added.
Determining countrywide demand for this type of housing depends on the way the government measures its data.
As of October 2020, 55,785 people and groups of people were seeking to purchase serviced plots of land, according to local authority registers.
“The registers suggest demand for CSB in England is just over 16,000 a year,” said Bacon. But he went on to highlight the unreliability of these figures, as 31 per cent of councils now impose some restrictions on joining their register, a further 30 per cent apply local connection tests, and 15 per cent apply charges - hence discouraging many from registering.
The Bacon Review put forward 6 recommendations:
- A greater role for Homes England, with the creation of a new Custom and Self Build Housing Delivery Unit supporting the creation of serviced plots on small and large sites and delivery at scale;
- Raise awareness and show by ‘doing’, including with a custom and self build ‘Show Park’ and a more robust approach to legislation;
- Support community, diversity and levelling up - by reigniting the Community Housing Fund and creating more opportunities for communities to build;
- Promote greener homes and increased use of Modern Methods of Manufacturing (MMC);
- Align custom and self build changes with planning reforms - in particular through maximising opportunities for permissioned land for custom and self build, across all tenures;
- Iron out tax issues to create a level playing field between this type of homes and speculatively built homes.
Raymond Connor, chief executive officer of BuildLoan, an intermediary lender, said the Bacon Review “is a major step forward in accelerating the self and custom build sector”.
He continued: “The review lays out the steps to be taken by [the] government to ensure the missing market of 30,000 to 100,000 of new homes required by consumers is met.
“Importantly, the report recognises the need for more lending capacity going forward to finance what it sees as a great opportunity for truly customisable homes to come to the fore.”
The ministry of housing, communities and local government said it will publish an official response to the Bacon Review in the Autumn.
ruby.hinchliffe@ft.com
