Welsh Government has announced Self Build Wales, a new £210 million scheme to diversify the housing market by offering loans to self builders.
Based on a revolving £40 million fund, the projected investment of £210 million is designed to make self and custom building a choice for more people, and not just the reserve of the wealthy.
Guaranteed by the Development Bank of Wales, the loans will be for pre-agreed plots and will be repayment free until the new home is completed and mortgaged. This is an important consideration as it enables people to build their new home and cover living costs, making the route far more viable to a wider range of people.
Approved applicants can reserve a plot with a 25% deposit on the plot cost, with Welsh Government supplying funding through the Development Bank of Wales. Flexibility is offered as repayments can be deferred for up to two years or until the home is finished.
Self Build Wales will see local authorities and housing associations making plots available with planning permission and site requirements in place, with individual Plot Passports that include approved designs for each site, as well as an estimated build cost and options for personalising the home to suit people’s needs. The applicants can choose to use an approved builder or do the work themselves
A new Self-Build Wales website, run by the Development Bank of Wales, will list the plot opportunities on offer. The plot opportunities come with a pattern book of approved designs, which include estimated build costs, or applicants can design their own home and cover any additional costs.
Growing self build in Wales
Housing and Local Government Minister Julie James said: “We want to make self-build available to many more people in Wales, not just the most privileged households. Finding the land, navigating planning consents and being able to afford to self-build while covering the cost of living can be real barriers.
“We have launched this scheme in partnership with local authorities to overcome all of these barriers. This offers a route into home ownership for people who want to stay in their local area but haven’t previously been able to afford to buy there. It also offers older and disabled people the opportunity to build custom adaptive housing that meets their needs in the communities where they want to live.
“Figures suggest an average self-build house in the UK costs only 70-75% of its final value because no developer profits are involved. This puts that benefit into the pocket of the homeowner. At around 10% of new homes the UK has a much lower rate of self-building than other countries around the world.
“As we work to increase the amount of housing available, this scheme will help people who wouldn’t normally think of self-build to consider it seriously.
“The scheme will launch in late spring this year, and in the coming months there will be more information available on the Your Home in Wales website.”
Andrew Baddeley-Chappell, CEO of the National Custom and Self-Build Association said: “Most of us aspire to build our own homes, yet despite the growth in the sector, too few currently achieve that dream. Putting the homeowner in charge leads to more homes of better quality and value. It helps bond the homeowner to the community where such homes are built.
“This package of measures sends a clear message that Wales welcomes and supports self-builders and we are excited to see the positive benefits that will flow from this announcement.”
Supporting small builders
Ifan Glyn, Director of Federation of Master Builders Cymru, commented on Self Build Wales, saying: “Significant growth in the custom and self-build market could help alleviate the housing crisis and will expand opportunities for small building firms across Wales.
“When you consider the housing crisis that exists, the custom and self-build market has been an under-utilised sector in the ongoing battle to meet the demand for homes. Research has shown that over half of adults in the UK would one day like to build their own home.
“Across the EU, approximately one third of all homes are custom or self-build whereas in Wales, it’s just five per cent. People want to custom or self-build their home but the right conditions haven’t been in place to allow them to do so.”
“The house building market is today dominated by a small number of very large companies. Back in 1988, 40 per cent of all new homes were built by small firms. Today, that figure is down to just 12 per cent. The type of firms that get involved in custom self-build projects tend to be small, therefore this can provide an opportunity for small contractors to re-engage with house building. Self-Build Wales could play an important role in creating new sources of supply, by encouraging new entrants into the house building sector and generally boosting the health and diversity of our industry.”
Self Build Wales details
- Development Bank of Wales will undertake due diligence, including ensuring the applicant appoints a builder who is genuine, qualified, financially stable, accredited with the Trustmark scheme, and able provide contracts and advice.
- Successful applicants can reserve a plot by providing a 25% deposit on the plot cost and the Development Bank of Wales will provide a loan for the balance of the plot cost and to build the new home.
- Where there are multiple applications, the local authority or housing association will assess and score the applications against agreed criteria, including energy efficiency, household income, or local housing need.
- The loan would be for a maximum of two years to encourage self-builders to complete the property; once complete, they would be able to access a traditional mortgage, repay the development loan and allow the money to be recycled;
- No fee or loan repayments will be required during the two year period, to allow the self-builder to cover their living costs through the build period;
- Development Bank of Wales loans would be limited by some of the same criteria as Help to Buy – Wales; once completed it must be the self-builder’s only or main residence and cannot be sold or rented for a minimum of five years post completion. Successful applicants will only be able to use the scheme once.