The SME Case for Self-Build

Brian Berry of the Federation of Master Builders (FMB), explores how and why Government policy designed to aid self-builders can actually help SME housebuilders too.

When discussing how to support small- and medium-sized housebuilders (SME), one area that is often not seen as a policy solution is empowering more people to commission the building of their own homes. This is often still treated as a niche area, or only for the lucky ‘Grand Design’ types who have the money and time to do it. However, it is SME housebuilders that are building these houses, so by supporting more people to commission self-builds, we also help the SME sector.

Data on the self and custom build sector in the UK, and its link to SME housebuilders, is on the whole, however, hard to come by, which is why we included a few questions related to the sector in our 2019 survey.

The results confirmed that the custom and self-build market is a major source of work for SME housebuilders, and demonstrates how the two sectors are very much connected. The data showed that over half (52 per cent) of SME housebuilders had built a home to the plan and specification of a new home owner in the last year. Of these, 12 per cent have built more than 10 houses this way in the last year. Therefore, it is clear that by supporting the custom and self-build sector, you are indirectly boosting SME housebuilders. We plan to include this question in the survey every year so that we can track progress, and see if the sector is growing.

If the Government wish to diversify the housebuilding industry, then empowering the consumer to build their own home seems to be one clear way of achieving this. So, what more can be done to support people to build their own home, and to make this more of a mainstream option? One new and exciting initiative, that could be replicated across the UK, is ‘Self Build Wales,’ due to be launched by the Development Bank of Wales later this year.

How will this work? Local authorities across Wales will free up small serviced brownfield plots which will then be listed on an interactive map of Wales that prospective self-builders can browse. Each plot on the map will contain information about the price of the plot, planning information, approved designs, estimated build costs, and the application process. Once the self-builder has chosen a plot, they will be able to choose a prepared design and then find an approved builder to build it.

In terms of finance, the self-builder would only need to provide a deposit of 25 per cent upfront for the cost of the plot, and then the Development Bank of Wales will provide a loan to cover the cost of the plot and building cost. The self-builder wouldn’t have to make any repayments on the loan until the property is completed and mortgaged, and the builder will be paid in instalments through the process. Once the house had been built, the homeowner would not be able to rent or sell their property for a minimum of five years after completion, without incurring a penalty fee.

This is a radical new policy and has the chance to bolster the self and custom build market in Wales and therefore SME housebuilders too. It is clearly too early to be able to tell whether the policy will be a success or not, and clearly there is a high amount of risk involved, but it could provide a framework for other schemes across the UK.