We’ve got the bricks and mortar and we’ve got the government support - but where oh where is the money for this growing instant equity scheme?

Housing Minister, Grant Shapps, released a message to the nation last week, urging more people to think about building their own homes this year. Mr Shapps wants to change the image of self-building and let us know that we don’t have to be on ‘Grand Designs’ with a budget of £3million to be able to attempt the venture. Self-building is a viable option for the everyday man too.

Mr Shapps said:  "Building your own home should not be the preserve of a privileged few - I want to break down the barriers that many aspiring self-builders often come up against.  That's why I've asked experts at the National Self Build Association to work with us to develop an action plan to make it easier for people to build their own homes, whether on their own or as part of a community effort to build a whole new neighbourhood.”

Government officials are currently working with the National Self Build Association (NASBA) to formulate this action plan and it seems that the self-build industry is already receiving increased interest from a new breed of self builders.

Ted Stevens, Chairman of NASBA said: "We believe there are hundreds of thousands of people in the UK that are keen to build their own, very affordable homes, so anything the Government can do to help make this happen has to be applauded. By encouraging more self build people will get the homes they really want, very cost effectively. For example, it's perfectly possible to build a three bedroom home for around £150,000.”

But while interest in the self-build market is growing, there is little increase in the amount of action on the ground because there are simply not enough mortgages available for people wanting to build the ‘affordable’ house. There are currently only about a dozen lenders who will consider such borrowers.

A spokesperson for BuildStore Financial services said that there was ‘a drought in lenders’ and explained that the lack of lenders may be due to unfounded fears about the risk associated with self-building.

BuildStore added: “Building your own home means that you can avoid the costs of the middlemen. The result is that when the home is built and then valued, it is worth significantly more than the amount it cost to build. There is instant equity so the homeowner doesn’t need to wait around for the markets to recover before they see their investment showing a return.”

And it seems that the current climate bodes well for both the borrower and the lender. UK plot prices have decreased by around 35% over the last 3 years from an average price of £200,000 at peak to just £120,000 (for a plot large enough to build a 4/5 bed family home) and the number of available plots has also increased significantly.

However despite these apparently positive figures, lenders in the market remain cautious and feel that their caution is well founded. One development lender warned against the dangers of following our ‘dreams’ without fully understanding the realities.

James Bloom, Chief Executive of Regentsmead, said: “Like any specialist project, in self-builds there are many pitfalls that take years of experience to overcome. The media over the last few years has portrayed an image that it is cheap, quick and easy to either build or substantially renovate your own home. The reality is that one needs substantial practical experience to deal with the construction of a property and without this experience the owner would be totally at the mercy of their contractor.”

He added: “From a lender’s perspective lending to an inexperienced developer can be a nightmare and put the lender to be in a very precarious position. At Regentsmead we used to lend to non-experienced developers who had an experienced team and we found we had many problems. We have designed a scheme whereby the non-experienced developer can team up with an experienced person in the industry which protects all parties in the transaction. Working this way gives the lender, developer and the builder more confidence about the project and maybe this scheme should be adopted nationwide to help alleviate the problems associated with self-build.”

By Katie-Jill Rowland