‘Help to Build’ – a follow up

With the release of more information on the Governments ‘Help to Build’ scheme in November 2021, we speak to James Buchanan, our Custom Build Manager and steering group committee member, about the scheme and how it could help you build your own home.

What exactly is the ‘Help to Build’ scheme?

• The governments ‘Help to Build’ scheme is an equity loan backed and financed by the government, effectively delivering the same as the ‘Help to Buy’ scheme but for the self-build and custom build market.
• The purpose of the ‘Help to Build’ scheme is to increase the number of self and custom build homes being built, by opening the market up to a wider audience by providing financial support.
• The equity loan amount can be between 5% to 20% or up to 40% in London of the total estimated cost to buy a plot of land and build your home. You will need to have a minimum of 5% deposit as the maximum ‘loan to value’ will be 95% including the top up from the scheme.
• Eligible people can spend up to £600,000 on building their new home. This must include the cost of the land if you don’t already own it, and no more than £400,000 on the cost to build it if you already own a building plot.
• Please note that currently the scheme is only available in England, but hopefully if it proves as successful as we are all hoping it will, the scheme will be introduced more widely across the UK

How does the ‘Help to Build’ scheme support self-builders?

• In short, it will help secure a self-build mortgage by providing financial support.
• The ‘Help to Build’ scheme is designed to help anyone wanting to build their own home, but who don’t have the 30 – 40% deposit amount required for your typical self-build mortgages available today.

Who can apply for the Help to Build scheme?

You can apply for Help to Build if you:

• are 18 years of age or over, and have a right to live in England.
• intend to live in the newly-built home yourself.
• can secure a self-build mortgage from a lender registered with the ‘Help to Build’ scheme.

How does the ‘Help to Build’ scheme work, how is the equity released?

• The equity loan is released when your house build is completed.
• During the build the overall self-build mortgage is based on a 5% deposit from the owner and a 95% mortgage from the self-build mortgage lender.
• Once your house is completed and you move onto a standard mortgage 20% of the equity is paid by the government, meaning the structure is now:
  • 5% of your original deposit
  • 20% equity loan from the ‘Help to Build’ scheme
  • and then a 75% Mortgage.
• The Help to Build equity loan is not interest free. There is no interest charged for the first 5 years, but you will start to pay it from year 6, with a 1.75% interest rate.
• You must repay your equity loan at the end of the term (normally 25 years), or when you sell your home, pay off your mortgage, or you can repay at any time before.

What is the difference between self-build and custom build?

What is Self-Build?

Self-build is the construction of a home for yourself that includes everything from finding and buying the plot of land, carrying out the planning permission through to the end build.

Your input as a self-builder into the construction process varies depending on the amount of involvement you wish to have. As a self-builder you can contract out as much of the building works as you like. From appointing an Architect to design your home and put it through planning, to choosing a main building contractor, or indeed co-ordinating individual sub-contractors and trades directly to construct all or part of your build. The self-build process can be co-ordinated to meet your exact needs.

What is Custom Build?

In simple terms custom build offers a more guided process to building your own home than a traditional self-build.

Custom build homes are homes facilitated in some way by a developer. This still offers the chance to have a bespoke designed home that suits your needs, lifestyle and design preferences, but through a more hands off approach than a traditional self-build. This method could mean a single one-off bespoke home commissioned by an individual but built by a developer, but is generally a group of homes, built by a developer, but with the offer of bespoke design for each individual plot.

Why the has the government introduced the Help to Build scheme?

• The ‘Help to Build’ scheme has been created as a result of the Self and Custom Build Review by Richard Bacon MP. It has the objective of increasing the number of self-commissioned new homes to boost overall housing supply, whilst at the same time improving the quality of houses built.
• The Help to Build scheme will ensure that the houses being built are tailored to your exact needs. At the same time, it should drive a higher quality of finish because as the self or custom builder you can use the profit value between what the house costs a standard developer to construct and what they sell it to you for to improve the standard of your tailored home in both terms of internal finishes as well as eco efficiencies.

For more information on the ‘Help to Build scheme’ please visit the government website.

*please note that the above information has been taken from the government website and was current at the time of posting.