promoting more custom build housing
DESCRIPTION
Presentation to the BuildStore.Development Finance & Construction Conference.TRANSCRIPT
Promoting more
Custom Build Housing
Presentation to the BuildStore
Development Finance & Construction Conference
in association with
Ted Stevens, Chairman (NaSBA)
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
Insert HB&R graphs here
UK custom build home numbers
compare poorly internationally
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
• For housing this means
improving affordability, creating
greater stability in the housing
market and increasing quality
“…a clear and pressing need for more homes to
meet growing demand…”
Grant Shapps MP, 2011
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 programmeHousing Strategy announced Custom
Build Homes Programme:
• Councils to establish demand and
facilitate such housing
• More public land to be made
available
• Promote larger scale locally-
planned custom build home
developments
• Work with industry to establish a
Custom Build Homes Portal
• Appoint Custom Homes
Champion
• Make up to £30m available to
support provision of short-term
project finance for group
schemes on a repayable basis
Action Plan (July 2011) to
address barriers of land,
finance, regulation and
inadequate support and
guidance for self builders
Government asked to:• Make more land available for self-
builders
• Encourage lenders to offer more finance
products for self builders
• Remove and simplify over-burdensome
regulations holding back the sector
Commits Industry to:• Promote new implementation models,
such as making serviced plots available
• Work with Government to identify
suitable ‘revolving fund’ facilities to
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
• 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 self
builders
• 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 self
builders
• 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 self
builders
• Developer builds as required, and
custom builder is given choice to
finish-off units
Work with group of self
builders
• Contractor builds as required, and
custom builder is given choice to
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)
Work with group of self
builders
• Contractor builds as required, and
custom builder is given choice to
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
Work with group of self
builders
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)
Amsterdam
Almere
November 2007
JANUARY 2008
JUNE 2009
OCTOBER 2011
Homeruskwartier District, Almere, Holland
Homeruskwartier District, Almere, Holland
Homeruskwartier District, Almere, Holland
Homeruskwartier District, Almere, Holland
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