Further boost for aspiring 'Grand designers'

Further boost for aspiring 'Grand designers'


For the second time this year we find ourselves discussing the viability of self-builds by inexperienced but aspiring developers. Government housing minister Grant Shapps first urged the nation to consider self-builds in January, declaring: “I want to break down the barriers that many aspiring self-builders often come up against.”

Now, six months on, after teaming up with the National Self Build Association, Shapps has reignited the issue by encouraging the government to bring about the biggest changes in 50 years to boost the industry, complete with a newly published action plan.

The plan sets out 15 proposals, including:

• Calls for the Government to ask councils to gauge the demand for self-build in their area and account for this in their planning strategies.

• "Over-burdensome regulations hampering the growth of the sector" be removed or simplified, and calls for Government to introduce more proportionate planning rules for small developments.

• New implementation models, which include making serviced plots available to self-builders, be actively promoted across the industry and the public sector.

• Encourage financers to offer more finance products for those building their own homes, revolving funds to support group self-build schemes.

But are development lenders, bridgers and packagers now willing to work alongside inexperienced builders? And, does Shapps’ action plan affect their outlook?
Speaking initially to them, Shapps’ vision of mobilisation in the industry seems unlikely.

Noel Meredith, Director of United Trust Bank, says: “A borrower’s experience is vital to their chances of getting a loan in development lending. As a result this is not a market where a first time developer will find it as easy to secure a loan.”

As Shapps has proposed, one of the main changes that must be implemented for the public to turn into aspiring Grand Designers is the removal of theminefield of obstacles they are faced with.

However, it also seems to be this ‘Grand Designs’ ideology egging on novice builders that has dampened development lenders’ appetites for working with them.   The process, even if made simpler by new government proposals, is still a complex one.

Lucy Barrett, Director of Vantage Finance, says: “As good as it sounds in theory, I am just not convinced of the practicality of this type of project. Whilst it’s one thing to suggest that the process of planning permission could be un-complicated and to encourage finance, it’s quite another to expect someone with absolutely no experience in developing to be able to control the project without the risk of it going wrong.”

James Bloom, CEO of Regentsmead, says his company are only interested in funding commercial developments as they want to work with clients who build on a recurring basis. He too isn’t a fan of the ‘Grand Designs’ mentality:  “Many self-builders believe life is really like a Sarah Beeny programme, which shows a completely unrealistic view of property development.”

However, it may be precisely because of these types of programmes that there is a growing demand for the self-build industry to be opened up.

Research from Norwich and Peterborough Building Society (N&P) found that 30 per cent of people it polled would consider having their own home individually built in the next five years if the finance was available. Twelve per cent would consider undertaking a self-build project within the next 12 months.

Once upon a time the self-build market was estimated to produce 20,000 homes a year. Currently the figure stands at 15,000 but the government hopes to raise this to 50,000 homes a year. However, liquidity is still an enormous stumbling block. 

James Bloom says: “I believe there is a lack of lending in the entire development market caused by the general lack of liquidity; I do not believe this is particular to the self-build market.”

On whether Shapps’ plan is financially viable, James Bloom commented: “I believe what has been said is just spin without substance, where are the concrete proposals to get banks lending again into the market?”

Not everyone believes lending to first-time developers is a hazardous business.

Simon Ismail, Director at Goldentree, says: “We already provide development finance to individuals who intend to live in the property they are building.

“I am happy lending to a first-time developer so long as their builder is experienced, has good references and is using a reputable build warranty. I also want to see that they have carried out a certain degree of diligence.”

It appears that, although not impossible, this sort of financing requires extra attention to detail to potential pitfalls.

Lucy Barrett says: “If this is to get off the ground I think it would need to involve putting in methods of considerable supervision from experts in the field for people to work with on each self-build project, otherwise it could be a complete disaster.”

Regentsmead already sometimes adopt this policy whereby they partner inexperienced builders with experienced ones where necessary.

Six months on and the answers to mobilising the self-build industry are only just starting to come together.  In order to get this initiative fully of the ground, the government’s commitment to Mr Shapps’ proposal is of utmost importance and may go a long way to convincing lenders and packagers of the untapped potential that tailoring products for this market can afford.




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    Simon Middleton

    Self-Build is a misleading term and doesn’t always reflect the actual role of the self-builder which is predominantly one of project management. Build-Zone is proud to be part of the industry working group that put the action plan together (which included representatives from the financial sector) The group was specifically tasked with identifying ways to address barriers, many of those barriers being reflected in the valid points made in this article. This isn’t about spin – The work is being carried out now and includes identifying ways of actively reducing lending risk and to a certain extent the perception of risk by creating genuine concrete proposals. We simply hope that Lenders are prepared to consider those proposals, re-think the perceived risk and get involved in a market that historically has an average final loan to value of less than 60%.

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