Self Building

What the Right to Build act means for you, and how to get a Self Build Mortgage

The Right to Build Act, known formally as the Self build and Custom Housebuilding Act, came into force on 1 April and means local councils are now obligated to offer suitable, serviced plots to those who are interested in acquiring land on which to build their own home. Councils are also required to keep a register of these individuals and groups of people.

This is welcome news for the 1 in 8 people in the UK (12%) who expect to show an interest in self build property within the next year, according to research from Ipswich Building Society and the National Custom and Self Build Association (NaCSBA). However, the same research shows 77% of people are unaware these self build registers exist.

So, if you think this is something you’d like to pursue now or in the future, get in contact with your local council or visit the Local Self Build Register website.

The next barrier might be finance. A self build project can at first appear daunting, so it is important to do your research. To finance your project you may wish to look into a self build mortgage, which differs from a standard residential mortgage in that the monies can be released in stages. Stage payments mean you’ll only pay interest on the actual amount released, and not the total amount from the outset, which could make it a more convenient and affordable option.

Before approaching a lender or a mortgage broker for a self build mortgage you should make the following preparations:

  1. Find a suitable plot of land
  2. Obtain planning permission
  3. Have detailed plans of the property drawn up
  4. Outline a realistic projection of costs
  5. Have a deposit saved / put aside – the percentage will depend on the lender

Five top tips for those thinking of building their own home:

  1. As a general rule mortgage lenders will only lend a percentage of the full land and/or house value, meaning you will still probably need a sizeable deposit, typically at least 25 per cent
  2. Don’t forget to factor in somewhere to stay during the project. You may need to have funds to pay for alternative accommodation while your new property is being built.
  3. It’s a good idea to build in a contingency budget of around 10 per cent to cover the cost of any unexpected expenses during the build
  4. Don’t dismiss plots where a property already stands – sometimes it can be cheaper to knock down an existing property and rebuild a new one than to buy an existing property to the requirements you’re looking for
  5. Although it will add a cost to the project, if you are a novice or first time self builder then hiring professionals may be the best option. Making sure you budget for this from the outset will increase your chances of the project going smoothly from the outset, and staying on track with budget

Of course – like all self build projects – all lenders are different. It’s worth seeking out a provider experienced in self build mortgages and who utilises manual underwriting, such as Ipswich Building Society, which means real people assess every application rather than computer based scoring.

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