Promoting more Custom Build Housing Presentation to the BuildStoreDevelopment 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 ofindividuals for their own use, either by buildingthe 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 numberscompare poorly internationally Insert HB&R graphs here Source: NaSBA/SmartLIFE self build comparison
The Housing Strategy for England andthe 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 wherebuilding your own home is not just thepreserve of the privileged few.”Grant Shapps MP, Minister for Housing, June 2011“Self builders deliver affordable, greener andmore innovatively-designed homes, and makea big contribution to the number of newhomes built in this country. But there is stillsignificant opportunity for growth in thesector which can only be opened up ifGovernment and industry work together...… I pledge to continue pushing for furtheraction to make self build an easier option foreveryone.”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 programmeAction Plan (July 2011) to Housing Strategy announced Customaddress barriers of land, Build Homes Programme:finance, regulation and • Councils to establish demand andinadequate support and facilitate such housingguidance for self builders • More public land to be made availableGovernment asked to: • Promote larger scale locally-• Make more land available for self- planned custom build homebuilders• Encourage lenders to offer more finance developmentsproducts for self builders • Work with industry to establish a• Remove and simplify over-burdensome Custom Build Homes Portalregulations holding back the sector • Appoint Custom Homes ChampionCommits 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 groupsuitable ‘revolving fund’ facilities to schemes on a repayable basissupport group projects• Provide clear independent information towould-be self builders via a new online selfbuild ‘portal’, to enable more people to selfbuild.
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
Work with group of selfbuilders• Developer finds site and undertakes feasibility study of site development potential – eg multi unit scheme, block of apartments or terrace of homes
Work with group of selfbuilders• Developer finds site and undertakes feasibility study of site development potential – eg multi unit scheme, block of apartments or terrace of homes• Developer prepares outline scheme (no detail)
Work with group of selfbuilders• Developer finds site and undertakes feasibility study of site development potential – eg multi unit scheme, block of apartments or terrace of homes• Developer prepares outline scheme (no detail)• Community consultation showing indicative designs. Firms up design detail in discussion with clients
Work with group of selfbuilders• Developer finds site and undertakes feasibility study of site development potential – eg multi unit scheme, block of apartments or terrace of homes• Developer prepares outline scheme (no detail)• Community consultation showing indicative designs. Firms up design detail in discussion with clients• Submits for planning
Work with group of selfbuilders• Developer builds as required, and custom builder is given choice to finish-off units
Work with group of selfbuilders• Contractor builds as required, and custom builder is given choice to finish-off unitsBENEFITS 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)
Work with group of selfbuilders• Contractor builds as required, and custom builder is given choice to finish-off unitsBENEFITS 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, HollandAn area of 100 hectares to the SW of city centreSo far around 1,000 self build homes built; 3,000 plannedA number of different zones/themed areasCity put in infrastructure and sells plots at about £290/m2Real mixture of homes built but average three bed homesare costing £150,000 (including land)
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
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