The National Custom and Self Build Association has launched a manifesto with 10 key asks of political parties and the next Government that are essential for a better housing market.
The full details of the Manifesto are:
- Raise public awareness of the Right to Build in England (and equivalent in Scotland, Wales and NI) with a consumer campaign to help more of the 53% of adults who would like to build their own home to fulfill their ambition
Fifty three per cent of adults would like to build their own home at some stage in life according to a Building Societies Association survey[1], and a million would like to start a project in the next 12 months[2]. What’s stopping them is the availability of affordable serviced building plots and access to finance.
The Right to Build legislation in England promises to change this forever, opening up the market to everyone who wants to build a home, but only if they know about it. That’s why NaCSBA is calling for a Government-backed consumer awareness programme on the scale of the ‘Tell Sid’ campaign for the privatisation of British Gas in the 80s that gave rise to the ‘share owning democracy’. A custom and self build revolution could deliver 40-50,000 new, individually designed homes per year, helping to solve the housing crisis by increasing choice and affordability.
Legislation introduced in England in 2016 known as ‘The Right to Build’ requires all local authorities to assess demand from individuals and groups of individuals that want to build their own home, and to grant sufficient planning permissions for serviced plots to meet that demand. As part of their legal duty to measure demand, councils must maintain a Right to Build Register –access to all registers is available via the Right To Build Portal.
- Introduce a ‘Help to Build’ equity loan scheme for affordable self build homes to help more people get on the housing ladder and deliver a more diversified supply of new homes
A deposit of just 5% is required to buy a home under the Help to Buy Equity Loan scheme in England. The scheme has helped over 112,000 mostly first time buyers get on the property ladder since 2013. NaCSBA wants a similar scheme to help those excluded from the custom and self build market because they do not have a sufficiently large deposit to buy a plot and bankroll their project to the point when a stage payment mortgage will step in.
Stage payment mortgage specialists BuildStore indicate that the threshold for the size of deposit required to self build is now over £40-50,000. The Help to Build Equity Loan Scheme would be in the form of shared ownership with the Government, equivalent to up to 20% of the completed market value of the property. A monthly rental payment applies to cover interest payments.
If buyers decide to sell before buying the remaining 20% of their home, the Equity Loan becomes repayable together with any other outstanding mortgage balance, including a proportional share in any increase in value. This would provide an incentive for buyers to repay this debt before reducing their mortgage.
Many homeowners will be in a position to repay the Equity Loan as soon as they finish their build by remortgaging, as custom and self build homes are typically worth 20-25% more than they cost to build.
Unlike Help to Buy, every Help to Build Equity Loan will result in a new home being completed.
- Release more public sector land for the creation of serviced custom and self build plots – including low cost, affordable plots
The public sector is one of the biggest landowners in the UK with at least 6% of the entire landmass, much of it surplus to requirements. Only a small fraction of this surplus land could provide plots for 100,000s of new homes, including serviced plots for those who want to build their own home through custom or self build.
Public sector bodies have a duty to achieve best value when disposing of public assets but they are allowed to account for value beyond simply the highest bid, including the proportion of affordable homes a bidder promises to deliver.
The release of public sector land could provide much needed plots to kick-start community led housing projects, including custom and self build housing. The ‘build now pay later model’ could help group self builders and collective custom build projects that struggle for funding to buy land and build as a group, but are all eligible for mortgages on the homes once completed, to get projects off the ground.
Sale of serviced plots on public sector land could be prioritized for local people in housing need, key workers and serving or former members of HM Armed Services. The latter would very appropriate on surplus land owned by the MoD.
- Incentivise the public sector, for instance through access to low cost funding, to develop custom build starter homes to accelerate delivery and extend housing choice
Government in England could complement the new Home Building Fund by enabling councils to access low cost funding to create serviced building plots on public sector land, including regeneration sites, through a repayable finance facility, grant mechanism or low interest loans via the Public Works Loans Board. Similar policies in Scotland, Wales and Northern Ireland can bring forward sites for development by SME housebuilders and individuals wishing to build their own home, whilst also generating profits to put back into council services that are increasingly under financial pressure, or the creation of more affordable homes.
- Allow communities to use exception site planning permissions for Custom and Self Build homes where they are for local people, key workers and others who satisfy a ‘local connection test’
Exception site policy allows land outside of existing settlements that is not designated for new homes to be developed outside of policy, if it is for affordable housing or primarily for affordable housing, with an element of market housing to provide cross-subsidy. Where there is local housing need, communities should be able to bring forward sites outside of policy for custom and self build homes, as well as for ‘affordable’ housing, and to make such sites available only for people who meet a ‘local connection test’ established by the community. This would help ensure successive generations are not priced out of the housing market in the area where they grew up.
- Incentivise landowners to create and sell serviced plots direct to market by equalizing the tax status with that for selling land in a single transaction to the volume housebuilders
Many landowners would like to have a say in who gets to build on their land, and what gets built as a legacy, and like the idea of parceling their land up into individual plots for people to build their own home. The sale of individual plots can also command a premium compared to selling in a single transaction to a big housebuilder, especially with roads and infrastructure services in place. Unfortunately the tax system currently favours a single disposal of farmland as ‘a going concern’, and so after listening to their tax advisers, and considering the time and effort it takes to put in roads, sewers and other infrastructure and to sell off individual plots, they invariably take the cheque from the big speculative housebuilders. Equalising the tax status for the disposal of individual serviced plots would help transform the market for building land, allowing access for SME housebuilders, custom build developers, self builders and community led housing groups.
- Introduce tax relief for gifts of land and property for community led housebuilding
Community led housing projects can help people to build genuinely affordable homes to buy or rent, and to influence the design of their homes through custom and self build. It can also reduce local opposition to new housing schemes.
Landowners who would like to gift land and property to community led housing projects can do so tax-free if the organisation is a charity, but not all groups are structured as charities, and so NaCSBA proposes that tax reliefs be widened to help encourage more beneficial gifts for community led housing projects for those who would like to leave a legacy for the local community.
- Continue to exempt small scale Custom and Self build developments from town hall taxes intended for the big speculative housebuilders – and ensure this is available across the UK
There is currently an exemption from the Community Infrastructure Levy (CIL) for custom and self builders in England, but the eligibility rules aren’t always easy to comply with some people accidentally get caught up in the red tape and end up paying £10,000s in a tax that is really intended for the speculative housebuilders to help fund new schools, transport links and other major infrastructure projects required for expanding or new settlements.
NaCSBA would like to see the rules for the exemption – including the exemption for small sites from Section 106 contributions for infrastructure and affordable housing – simplified and changed to ensure those people building a home for themselves, often to improve affordability, don’t inadvertently get caught out by disproportionate tax bills that are really aimed at capturing some of the land value added by the grant of planning permission for larger housing sites.
- Encourage rural authorities to allow people who meet a local connection test to build an affordable home so they can stay in the area (retained at a discount to market value in perpetuity).
Shropshire Council has helped tackle the affordability crisis for local people living in rural areas who are priced out of the housing market by introducing an exception site policy for single new self build homes. To use the exception, people must pass a local connection test, but subject to majority support from the local community, they can build a home for themselves on a site that would not otherwise be granted planning permission for housing. The new house is subject to a legal agreement (Section 106) that means it must be kept at discount market value in perpetuity, so future owners must also pass the local connection test, and the house cannot be sold for more than 65% of open market value or made larger than 100 square metres.
20-30 new self build homes are built on this basis each year in Shropshire. If every rural local authority in the UK were to do the same it would create 3,000-4,000 new affordable rural homes per year, going a long way to solving the rural housing crisis, especially in areas popular with second home owners.
- Simplify the process for community groups to buy land and get planning permission for homes, including preferential bidder status on the sale of public sector land
Local authorities often want to support custom and self build in their area, especially in England where there is a legal duty to assess and meet demand for serviced building plots under the Right To Build. However, estate departments tend to default to the disposal of land on the basis of the ‘best consideration reasonably obtainable’. Consequently the sale of public assets invariably put sites our to tender or auction to the highest bidder, without taking other considerations into account like community benefit, getting people out of local authority housing and into home ownership and the quality and sustainability of the homes to be constructed.
Councils already have the ability to prioritise public policy measures over best bid but clearer guidance is required to ensure they are aware of this option when disposing of land.
Councils could also streamline the planning approval process for community groups and custom build by reducing the time it takes to approve final details known as ‘reserved matters’ in under 4 weeks, instead of the current 8 weeks. Overseas, where custom and self build constitutes on average 37% of new homes, councils make decisions on these approvals in as little as 48 hours.
[1] BSA Survey of 2011.
[2] Ipsos Mori Omnibus Survey of 2016 commissioned by NaCSBA