The barriers to Self Build
Whilst everyone agrees that finding a plot of land is the main barrier to self build housing, Planning and Finance also form barriers to Self Builds.
Land
Finding and buying the right plot is generally regarded as the most important barrier faced by self-builders. The main problem is not the availability of land but managing its acquisition and acquiring planning consent.
Self-builders find land in a wide range of ways. Some is found through land or estate agents, although these can also block the flow of land to the self-build market because they informally tender the site to housing developers. Recent years have seen the emergence of specialist land finding agencies and plot developers. The latter purchase sites prepare a development brief with local planners and service and sell plots to self-builders.
The average UK price for a self-build plot in early 2000 was £44,183, but there are large regional differences. Prices in South East England were more than double the national average (i.e. £100,000); the next most expensive region, South West England, was 39 per cent higher than the average.
Planning
Planning affects self-build because policies influence the location of new homes, especially in the countryside, and because of the impact of local planning practice. The main problem is obtaining planning consent. Many of those involved in self-build feel that planners go for safe design and are stricter with self-builders than with other developers.
Self-build has an impact on the resources of local planning authorities. Planners feel it is administratively easier to allocate and deal with large sites. Many in the self-build industry believe this fuels prejudice against self-build. This is one of the many reasons for the recent innovation of grouping self-build plots together so that the self-builders are a "force to be reckoned" with.
Finance
Risks for mortgage lenders are low because customers tend to be highly motivated and have higher than average incomes, self-build proposals are subject to close scrutiny to ensure they are financially viable, and the loan-to-value ratio is usually low.
However, only a few lenders have set up specialist self-build divisions and, even when lenders are committed at strategic level, policies may not always be pursued with such commitment at branch level.
One major problem for self-builders was timing the release of funds in relation to the project development process. Lenders have addressed this by introducing greater flexibility in stage payments and paying them as a percentage of costs rather than projected final value. There are, however, still a number of financing problems for self-builders.
Most lenders cap the mortgage at 75 per cent of the estimated property value once completed and pay in arrears to reduce the risk. And the majority of self-build projects involve a household selling an existing property, usually prior to the land purchase.
The lack of appropriate short-term finance means that self-builders often need to live in temporary accommodation.
