Why now’s the time to build your dream home

George Osborne is an unlikely figure to make anyone’s dreams come true, but he might be about to make yours a reality. At least, he could if you’ve been dreaming of building your own home.

In his Budget speech, the Chancellor outlined plans for a new garden city and pledged to extend the Help to Buy equity loan scheme to the end of the decade.

But he also promised £150 million of funding to help aspiring self-builders make their dreams come true. On top of that, the Government is to consult on a new ‘Right to Build’ scheme, which would give would-be builders the right to buy plots of land from councils.

But is self-building really financially viable for the majority of people? And why does the government care who’s building their homes?

Dealing with the deficit (of homes)

Osborne claimed that house building is up by 23%, but he acknowledged this is not enough. Housing charity Shelter has warned that we need at least 250,000 new homes a year for the foreseeable future; we’re falling far short of that.

So encouraging Brits to consider building their own homes, as is popular in many other European countries, makes sense. However, if you think you’ve heard this before then you’re right; in 2011 the Government unveiled plans to double the number of self-builds from 100,000 to 200,000 over 10 years. There hasn’t exactly been an explosion of custom-built homes.

[Kevin McCloud: Why we need to build homes to live in - not to sell]

How many new homes are self-builds?

Government figures show that the custom build sector is responsible for around one in 10 news homes, far fewer than in many other western countries.

But apparently, there are plenty of self-built homes on the way. A few months ago, Ted Stevens, the chair of the National Self Build Association (NaSBA), said: “The custom build sector is set to take off over the next few years. A recent NaSBA progress report to the government suggested that up to 4,000 additional self or custom build opportunities are currently in the pipeline.”

Does this mean more affordable homes?

One problem with self-build homes is that they are often more suited to Grand Designs than affordable living – they are often custom-built luxury dwellings rather than low-cost starter homes.

Last year, the University of York and Lloyds Banking Group published their joint Build-it-yourself report, assessing the current state of the self-build market. It found that self-build is currently concentrated among older, more affluent households, meaning high-end properties are being built rather than cheaper homes.

There’s also evidence that many self-build projects begin with the demolition of an existing house, meaning they don’t add to the housing stock and ease the housing shortage.

However, if there was an increase in self-building numbers and more were built from scratch then this could trickle down to the wider housing market.

[A home for £41,000... But you have to build it yourself]

Can you save money with a self-build?

Will you pay less for a self-build home, and could you even turn a profit? With all the effort of building a home from scratch, most people would want to see some returns.

The report from the University of York showed that the average build cost including land was more than £255,000, higher than the average house price of £168,000. Yet it suggested that this was being warped because the majority of self-builds are currently at the higher end of the housing market.

Self-build experts suggest that unless the builder allows the costs to really spiral out of control, they can expect their finished home to be worth 20% to 25% more than they paid in land and construction – so there’s a chance to boost your equity from the very start.

[What exactly are you paying for when buying a house?]

Will the Budget make it easier?

George Osborne’s speech today pledged £150 million of repayable Government funding for aspiring home-builders, and that could be pivotal. The University of York report showed that builders needing mortgages face “considerable constraints”, with few lenders offering suitable finance – so extra funding could be an important step in boosting building.

Of particular interest is the news that the government wants self-builders to be eligible for 20% equity loans, as an expansion of the Help to Buy scheme.

Where can you get self-build help?

It’s important to understand exactly what kind of project you’re taking on with a self-build; the average time taken to complete construction is two years, so it’s a major task.

Would-be builders should research carefully before committing to land or making an agreement with architects or builders. Channel 4 has a good guide to self-building projects, while NaSBA has a wealth of support and the website Build It helps connect people with tradespeople and land.

[How much could you save building your own home and how do you fund it?]

Will self-built homes ease the housing crisis? Do you dream of building your own home? Will Osborne’s announcement make it easier? Have your say using the comments below.