| |
CRUNCH TIME FOR SELF BUILD
Despite the ever-tightening grip of the UK’s ‘credit crunch’ on
the economy, and the resulting down-turn in the housing market,
there is one sub-sector which has quietly been delivering around
20,000 new homes over the last year. Far from being another
casualty of the economic turmoil, BuildStore, the pioneering
specialists at the heart of the self build and renovation
market, claims that there is no better time for self build.
“Self build’s niche status has protected it from the set backs
felt by the wider housing and mortgage market. In fact, some of
the effects of the credit crunch have helped to create a more
favourable environment for self build,” explains BuildStore’s
Chief Executive and founder, Raymond Connor.
At a time when the Government are tasked with providing new and
housing stock, the housing market is at a standstill. With
lenders tightening their belts, mortgages are in short supply,
and rates are not favourable. In an effort to save their
profits, major developers’ have been slowing down and even
stopping construction on residential developments, blaming a
lack of buyers. Mr Connor explains: “The increased cost of
borrowing, along with other financial worries, has deterred both
first time buyers and homeowners from getting on and moving up
the property ladder.”
Despite the difficulty in getting a mortgage for new and
existing homes, BuildStore Financial Services, the UK’s leading
provider of self build and renovation finance, boasts a panel
of lenders, offering specialist self build and renovation
mortgages, offering up to 95% advance payment mortgages at
competitive rates, for the cost of the land and the build. The
ground-breaking Accelerator mortgage, developed by BuildStore in
1998, ensures positive cash-flow, with advance stage payments
throughout the project and has revolutionised the self build
market.
The current climate is making it difficult to buy and sell
property; the average time taken for a house to sell has gone up
12% since last year to 85 days; people can’t buy because of
restrictive lending policies, and homeowners don’t want to sell,
because of falling house prices, and the lack of buyers.
The 95% advance payment Accelerator mortgage however removes the
need for homeowners to sell their properties, making it an
appealing option for first-time buyers also.
The new build market is also not fairing well, with
housebuilders facing an uphill battle to save their profits.
Their drive for profit often results in high-density and
attached housing developments, and prevents the opportunity for
innovation, specification and consumer consultation. The average
cost of new build
home is almost £50,000 more (15%) than the average house price
at £258,319.
Over 60% of new build homes are flats or apartments, and less
than a quarter of them are detached. With most homeowners and
first-time ‘movers’ looking for larger properties, the gap
between supply and demand for detached houses is widening, which
continues to drive up prices. Because self builders are not
driven by short-term profit, they are able to design and build
their ‘dream’ homes to their own specification, thus allowing
complete ‘lifestyle compatibility’. They can also benefit from
a 25-30% return, as self build houses are typically worth up to
one third more than their combined land and build cost.
As the housebuilders continue stalling work on their
developments, and the rest of the market is at a standstill,
there are a number of unique opportunities that self builders
can take advantage of.
Data from PlotSearch, BuildStore’s land-finding database has
shown two significant trends since the start of the ‘crunch’
last summer. Firstly, the number of plots for sale has
increased, especially since the beginning of the year. At the
same time, the number of plots being removed from PlotSearch, as
having sold, is going down. With more land becoming available
for sale, and less being sold, there is a lot more land
available for self builders, and many bargains to be had.
Similarly, self builders can also capitalise on the current
under-employment of construction workers. With more tradesmen
available and looking for alternative sources of income, self
builders can get their projects completed more quickly, and
potentially at a cheaper rate.
Even without these opportunities, the true value and gains of
self build stack up. There is a growing consumer demand for
quality, sustainable and original housebuilding, which is not
currently being met by the large developers; self build helps to
fill that gap, by providing high-quality bespoke and practical
housing.
Further incentives include the ability to reclaim the VAT on
building materials, saving on stamp duty, paid only on the value
of the land, not value of the house, and saving on material and
tool purchase through merchants and leading manufacturer’s with
a TradeCard.
Mr Connor is confident that given the availability of finance,
land and labour, more people will turn to self build to meet
their housing needs: “Self build has a misplaced reputation as
being too exclusive and expensive, but it is fast becoming a
more accessible and affordable alternative, particularly in the
current economic climate. Although self build still remains a
relatively disparate and under-represented sector, its potential
to make a contribution to the housing market should not be
ignored. By providing homes that are more ‘in-tune’ with how
people want to live, self build could be one of the key
solutions to solving the UK’s housing ‘crisis’,” he concludes.
|
