Promoting more Custom Build Housing

Promoting more
Custom Build Housing
Presentation to the BuildStore
Development Finance & Construction Conference

Ted Stevens, Chairman (NaSBA)
in association with

Mario Wolf, Senior Policy Advisor, Housing
Supply and Markets (DCLG)

What we want to cover
• What is the Custom Build Homes sector?

• The Policy driver - the Government’s Custom Build
Homes programme

• Ways in which builders can deliver custom homes

• Learning from the Dutch experience

• What’s in it for developers?

What are ‘Custom Build’ Homes?
‘Homes built by individuals or groups of
individuals for their own use, either by building
the home on their own or working with builders’

The last five years – share of all housing

Source: HB&R – UK Self Build Market report. Q1 2011

UK custom build home numbers
compare poorly internationally

Insert HB&R graphs here

Source: NaSBA/SmartLIFE self build comparison

The Housing Strategy for England and
the Government’s priorities
• High level Government focus on
economic growth and social
mobility

• Strong emphasis on taking a
localist approach - putting
communities in control
“…a clear and pressing
• For housing this means need for more homes to
meet growing demand…”
improving affordability, creating
greater stability in the housing Grant Shapps MP, 2011
market and increasing quality

Housing supply measures
• The Housing Strategy sets out package of measures to boost the
supply of new homes
• Substantial new direct investment– focused on getting the
housing market moving again
• New Buy Guarantee scheme to help prospective buyers
• Ambitious measures to boost house building substantially, including a
£1.3bn investment to get Britain building
• Freeing up public sector land for 100,000 new homes

• Stronger support for Custom Home Building
• In the long-run, responsiveness of supply to demand driven by:
• Simplified planning framework that supports growth
• Proportionate and cost-effective regulation

The Custom Build Homes Programme
“…we need strategic reform of the way in
which housing is planned and funded
[including]:…

Stronger support for Custom Home Building,
including making available up to £30 million of
new funding to support provision of short-term
project finance on a repayable basis.”

“I want to create a self build revolution where
building your own home is not just the
preserve of the privileged few.”
Grant Shapps MP, Minister for Housing, June 2011

“Self builders deliver affordable, greener and
more innovatively-designed homes, and make
a big contribution to the number of new
homes built in this country. But there is still
significant opportunity for growth in the
sector which can only be opened up if
Government and industry work together...
… I pledge to continue pushing for further
action to make self build an easier option for
everyone.”
Grant Shapps MP, Minister for Housing, July 2011

Why is Government focussing on this sector?
• Important to national economy (value over £3.6bn annually)

• Important contribution to housing supply (sector builds as much as our large
house builders)

• Growth potential (demand growing) - More people want to custom build.
Ambition is to double size of sector over next decade

• Protects and creates local jobs, strengthens local construction supply chains
and promotes sector diversification

• Improves local choice and can offer better value for money (scope to make
housing more affordable for a new generation)

• Localism - Big Society - in action

Custom Build Homes programme
Action Plan (July 2011) to Housing Strategy announced Custom
address barriers of land, Build Homes Programme:
finance, regulation and • Councils to establish demand and
inadequate support and facilitate such housing
guidance for self builders • More public land to be made
available
Government asked to: • Promote larger scale locally-
• Make more land available for self- planned custom build home
builders
• Encourage lenders to offer more finance
developments
products for self builders • Work with industry to establish a
• Remove and simplify over-burdensome Custom Build Homes Portal
regulations holding back the sector • Appoint Custom Homes
Champion
Commits Industry to: • Make up to £30m available to
• Promote new implementation models,
such as making serviced plots available support provision of short-term
• Work with Government to identify project finance for group
suitable ‘revolving fund’ facilities to schemes on a repayable basis
support group projects
• Provide clear independent information to
would-be self builders via a new online self
build ‘portal’, to enable more people to self
build.

What action has Government taken…
• Moved quickly to established Industry-
Government Implementation Group to
implement Action Plan and maintain momentum
• Written to banks and building societies calling on
them to make more finance products available to
custom home builders
• Promoting use of publicly owned land for self
build housing- approximately 40% of land suitable
for development is currently sitting within public
sector land banks
• Introducing more proportionate and cost-
effective regulation
• Localism Act and planning reforms

…further Government action
• National Planning Policy Framework (NPPF) asks local
authorities to take account of local demand of people wanting
to build their own homes (Paragraphs 50 and 159)

• Looking at how we can promote larger scale locally-planned
custom build home developments

• Worked closely with industry to establish new Self Build Portal
and support Kevin McCloud as new Industry Champion to raise
greater public awareness of the benefits of custom home
building

• Worked closely with industry to shape a new £30m investment
fund to support provision of short-term project finance to multi-
unit ‘group’ projects on a repayable basis

Where next?
• Launch and implement £30m investment
fund
• Joint Industry-Government engagement
with local authorities, developers, lenders
to explain and promote the take-up and
facilitation of the self build business model
• DCLG/HCA workshop on bidding for public
land disposals and applying for funding
• Continue to work on taking forward residual
actions in Action Plan which have not yet
progressed
• Industry report back to Ministers by end
2012

Ways in which builders can deliver custom homes…
• Sell ‘serviced’ plots with services and access in place

• Sell plot with a design and build contract to build a client’s house design

• Sell plot and build a watertight shell with the option for the self builder to
finish-off

• Offer complete package ‘turnkey’ service – from plot to handover, including
full design, construction and finance

• Work with group of self builders to build – for example – a terrace of homes,
block of flats or multi-unit scheme

• A case study on Homeruskwartier District in Almere – a 3,000 home self
build project that’s currently underway in The Netherlands

Providing ‘serviced’ plots

Sell plot with design and build contract

Sell plot and build watertight shell

Offer complete package ‘turnkey’ service

Work with group of self
builders
• Developer finds site and
undertakes feasibility study of site
development potential – eg multi
unit scheme, block of apartments
or terrace of homes

builders
or terrace of homes
• Developer prepares outline
scheme (no detail)

builders
or terrace of homes
scheme (no detail)
• Community consultation showing
indicative designs. Firms up design
detail in discussion with clients

builders
or terrace of homes
scheme (no detail)
• Community consultation showing
indicative designs. Firms up design
detail in discussion with clients
• Submits for planning

builders
• Developer builds as required, and
custom builder is given choice to
finish-off units

builders
• Contractor builds as required, and
finish-off units
BENEFITS FOR CONTRACTOR
• Pre-sold development off plan
• Cash flow benefits (plot sales and
staged payments for build)
• Minimal involvement in the
interiors/fitting out work (where
homes are self finished)

builders
• Contractor builds as required, and
finish-off units
BENEFITS FOR CONTRACTOR
• Pre-sold development off plan
• Cash flow benefits (plot sales and
staged payments for build)
• Minimal involvement in the
interiors/fitting out work (where
homes are self finished)

BENEFITS FOR CUSTOM BUILDER
• Can influence design
• Reduced risk
• Firmer price certainty
• Save perhaps 20-25% if self finish

Homeruskwartier District, Almere, Holland

An area of 100 hectares to the SW of city centre

So far around 1,000 self build homes built; 3,000 planned

A number of different zones/themed areas

City put in infrastructure and sells plots at about £290/m2

Real mixture of homes built but average three bed homes
are costing £150,000 (including land)

Promoting more Custom Build Housing

Homeruskwartier District, Almere, Holland

Some lessons from Almere for UK practice
• Strong LA vision and leadership needed
• Public land critical to promote sector growth
• Master plan large sites through competitions but enforce through light touch
planning regulation (reduce consent times by using SPZs, design codes, LDOs)
• Marketing essential to promote model. Central marketing through ‘Plot Shop’ with
range of ‘approved builders’ gives one-stop-shop for self builders
• Management company needed otherwise LA plot sale process onerous
• LA can offer cheaper land/help with mortgage but still make profit- can help FTBs
• Economic climate and stagnating housing market helps support new business
models- self build seen as market opportunity
• Government needs to support but no need for top-down regulation- leave to
localities
• Culture change- builders and LAs don’t necessarily know best (let local people build
homes they want. Don’t micro manage)
• Housing Associations can play important role to promote
• Lenders need to embrace opportunities presented by market- business opportunity
• Self build not sole answer to housing crisis but plays important role

The size of the prize for developers?
• Self build sector set to double in size – that’s another
£3billion a year

• Most of that growth is expected to be driven by
developers ‘enabling’ a range of small to medium sized
multi-plot (‘group’) schemes

• New £30m Investment Fund that will shortly be
launched will help with land, infrastructure and
construction costs on multi-unit schemes

• Those that get in first will be ahead of the pack and will
gain the biggest share of this growing market

Promoting more Custom Build Housing

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