"Awareness will continue to play a huge role in maintaining this self-build momentum, and intermediaries will play a key role within this."
For those landlords looking to add to their portfolios or for borrowers exploring their property-related aspirations, the energy-related performance of their new or existing properties has taken on a whole new importance when it comes to both the impact on the environment and on their pockets.
A strong EPC rating is one of the reasons why more homeowners are opting for new build properties but there is another option which could enable buyers to really put their own environmental stamp on their new home and that is self-build.
Self-build remains something of a niche area but we continue to see some sustained growth. Figures from the Department for Levelling Up, Housing & Communities figures recently outlined that 12,263 individuals registered to custom or self-build over the year to 31 October 2021, a rise of 31% from the same period the previous year (9,376). This uplift comes on the back of recent initiatives such as the Bacon Review, completed last year, which outlined ways to boost self-build such as raising awareness and ironing out tax issues.
Awareness will continue to play a huge role in maintaining this self-build momentum, and intermediaries will play a key role within this. Getting back to basics for a moment, this remains a marketplace which can be somewhat misunderstood. So for the purpose of clarity, a self-build mortgage is to help those borrowers who want to:
• Purchase land and build a new property
• Raise capital and build a property on land that they already own
• Convert an existing structure (example – a barn into a home)
• Extend their existing home (including making home improvements or renovation)
• Purchase a new home and build an extension (including home improvements and renovation)
In terms of some of the types of schemes available:
Advance Stage Payments Scheme
Available for borrowers who choose to have funds released in advance of each stage of the project. Restrictions apply in respect of the maximum amounts released at each stage of the build.
Arrears Stage Payments Scheme
Available for borrowers who choose to have funds released in stages as works progress and after each stage of the project is completed. Restrictions apply in respect of the maximum amounts released at each stage of the build.
Custom Build Scheme
Available for borrowers who choose to have input into the design of their home and to purchase a serviced plot which has reached foundation stage (Golden Brick). The borrower is able to bespoke the property to their requirements, subject to this being within the guidelines of the developer, planning rules and conditions within the footprint of the property.
The accessibility and availability of any scheme will depend on the individual product and providers will all have their own approaches to this type of lending. So, if you would like to know more about self-build then speak to lenders who are experienced in offering this product type. We are always open to getting the self-build message out there and sharing our insights into this product type, especially for those borrowers who have energy efficiency at the forefront of their minds.
