A new Help to Build scheme has recently been announced by the UK government. It will allow anyone hoping to complete a self-build project to benefit from lower mortgage rates after the government have pledged £150 million in funds towards this change. This is welcome news for aspiring self-builders who have long desired a scheme that would grant them access to affordable housing and custom builds.
With such recent news and a new scheme, it’s important to explore what it will mean for anyone looking to complete a self-build project and how it will work. This guide will provide you with more information on what the new scheme encompasses, how it works and what it means for self-builders.
Click the links below to jump to the relevant section:
Learn more about what the Help to Build scheme is and how it can help with a self-build project.
Find out more about how the Help to Build scheme works and how to access the funding.
Learn more about how this scheme will benefit the self-build market.
Find out how long you will have access to the Help to Build scheme for.
What is the Help to Build scheme?
Plans for the Help to Build scheme were announced by Housing Secretary Robert Jenrick in April 2021 as part of the government’s plans to ease the current housing deficit in the UK and make building your own home more affordable and attractive. This is something that many aspiring self-builders have been waiting for and there will be many looking to get a foothold on the property ladder!
Traditionally, getting a mortgage for a self-build has been more difficult and a much larger deposit has been required, so the recent announcement which, for many, has meant the ideal of building their own home is now becoming more of a reality.
With £150 million allocated in funding for self-builders, there will be countless numbers of people in line waiting to build their new home from scratch. Currently, only 7% of homes in the UK are built in this way and the scheme is set to give smaller housebuilders and consumers the chance to build the homes they want, where they want.
In many ways, it is similar to the government’s Help to Buy scheme, although it differs in that you do not need to pay an equity loan to a single developer once the build has been completed because multiple parties may be involved in the construction of a self-build.
How does the help to build scheme work?
The money from the £150 million funds will facilitate equity loans for self-builders, making a low deposit mortgage possible. Now, if you want to build your own home, you will only need to come up with 5% of the property’s predicted market value in order to obtain a mortgage.
The other 95% will be provided by the mortgage lender, making it significantly more affordable in the short term for anyone looking to build their own home. If, in any event, the homeowner cannot afford to continue making mortgage payments, lenders have a solid guarantee that the government will repay them for 95% of any losses they make on the resale.
Self-builders benefit in more than one way from the scheme:
- Provide more realistic access to low deposit mortgages
- Enjoy mortgage options from a wider range of lenders
- Scheme may entice more lenders to offer low deposit mortgages
Alongside the Help to Build scheme, the UK government is also releasing £2.1 million of additional funding to collaborate with communities on the kinds of homes, retail establishments and offices they want to see in their local vicinity.
This part of the plan will focus on working in tandem with local communities to establish where residents want the new properties to be built and give locals a say in what they should look like. The latter part of the plan will provide a boost to many smaller towns and villages, where residents prefer newer builds to harmonise with the scenery and with older houses and shops in the area.
Impact of Help to Build on the self-build market
The scheme is set to revolutionise the self-build and housing market. Previously, the Help to Buy scheme had allowed first-time buyers to secure their dream properties with a lower deposit.
However, the Help to Buy scheme is an equity loan scheme which is only for first-time buyers and was not available for self-build projects. In addition, the equity loan could only be used to buy a new build home.
Over the long-term, the Help to Build scheme will:
- Cater to the growing demand for self-builds – this scheme will grant access to those who might have seen a self-build project as a pipe dream.
- Substantially increase access to the self-build market – according to government sources, as many as 30,000-40,000 new self-builds could result from the scheme annually.
- Help to meet demand in the housing industry – currently, demand far outstrips the supply for housing and this scheme will help to ease the deficit by putting more power in the hands of smaller housebuilders and consumers.
- Allow more homeowners to build the house they want, where they want – with so much demand, it can be difficult to find affordable housing in some areas, so this will allow homeowners to build a home that suits their needs, in the area they want, without breaking the bank.
How long will Help to Build run?
At the moment, it’s expected that the scheme will run until December 2022. But, many government schemes of a similar nature have been extended, especially when they have proven to be successful! So, there is a chance that Help to Build will follow the same path. Help to Buy was given a considerable extension, so the deadline for the Help to Build scheme is something to keep an eye on throughout the rest of 2021 and 2022.
Alongside the announcement of the Help to Build scheme, the government also published its Self and Custom Build Action Plan, setting out its longer-term commitment to the proliferation of self-builds details how the government plans to review and improve the Help to Build scheme as well as the announcement of funding for a Right to Build Task Force. The latter will help the government to work in partnership with local authorities going forwards, ensuring that the local people have a say in the policies and their implementation.
Using trusted suppliers for self-build projects
One of the elements that will help any self-build project for those looking to take advantage of the scheme will be ensuring the use of trusted suppliers. Using trusted suppliers with their own robust supply chains in place will play a huge part in helping to overcome any supply chain issues that may occur as a result of an increase in demand for housebuilding as well as other factors such as COVID-19, Brexit or other major construction projects.
At Origin, we ensure that we have the capacity and stock available to make sure that our windows and doors are delivered on-site to the timelines of the project to help prevent any delays. This enables us to equip your local installer to ensure your project is completed on time. To find your local installer, use our search tool here.
