Self-Build and Custom-Build
Debate between Kris Hopkins and Richard Bacon
The Parliamentary Under-Secretary of State for Communities and Local Government (Kris Hopkins)
I congratulate my hon. Friend the Member for South Norfolk (Mr Bacon) on securing this debate and pay tribute to him for his work as chairman of the new all-party group on self-build, custom-build and independent housebuilding. I appreciated the opportunity to address the all-party group a few months ago. Let me also put on record my appreciation for the massive contribution that Ted Stevens has made to the custom-build and self-build industry, driving it forward positively.
As we have heard, my hon. Friend is very passionate about this issue and is a persuasive advocate of custom and self-build housing. He has rightly highlighted the huge potential that broad sector has to help support the need to build more houses in this country. The debate could not be better timed. As he mentioned, we are in the middle of the second national custom and self-build week, which was launched on Saturday by my right hon. Friend the Secretary of State for Communities and Local Government at Grand Designs Live. That is an initiative that my Department is delighted to support, as it draws national attention to the huge potential of this form of housing to become a mainstream housing option for any aspiring home owner in this country.
Why does this question matter to the Government and why do we support the sector? Unlike the previous Administration, who did absolutely nothing to support self-builders and custom-builders in this country, the Government are committed to and are offering strong support to this part of the sector. We face a huge challenge in building the number of homes that are needed, and we must look at all opportunities to stimulate that supply. Supporting more self-build and custom-build housing is part of a much bigger package of housing supply initiatives the Government are introducing to get more homes built. Some 165,000 affordable houses will be completed next year to add to the housing supply. We have just closed on bids to deliver another 170,000 houses in the years to 2018. We have allocated some £1 billion to deliver 10,000 houses in the private rented sector and we have launched a prospectus to encourage councils to bid for £300 million to deliver housing across the sector.
My hon. Friend kindly mentioned the Help to Buy scheme, and I agree that it is a huge encouragement to enable people to get on the housing ladder. Some figures have been issued in the last 24 hours that are pertinent to the debate. Under the Help to Buy scheme, the average mortgage is £145,000 with an average deposit of £36,000. While it is a vital part of our offer on housing, it constitutes only 2% of transactions, and I do not believe it is fuelling a bubble.
Many people would love to own their own home. As my hon. Friend said, research by Ipsos MORI has shown that more than 1 million people want to do so in the immediate future. That strong level of interest is not surprising. Custom-build and self-build housing offers people more choice and the ability to design a home to suit their own needs, leading to greener and better designed homes. In many cases, that is more affordable than buying a home in the conventional way. A report published by Lloyds Banking Group concluded that self-builders can save between 20% and 25% on the cost of an equivalent home on the open market, a crucial saving for those who are trying to get on the housing ladder.
There are wider benefits. A strong custom-build sector helps diversity and strengthens our house building industry, bringing new opportunities for medium and small house builders. It can also speed up the supply of new homes where there is strong demand for plots. It sustains and creates new jobs and supports local economies. As my hon. Friend said, it helps young people who are going into apprenticeships and vocational jobs—an important part of the economy—which are facilitated by this type of build.
Let us be clear. The custom-build sector already makes an important contribution to our housing supply with around one in every 10 homes being built or commissioned by individuals. That is much more than many volume builders are already building. It is important to say that custom-build and self-build are already facilitating a turnover of around £4 billion per year.
There is significant growth potential in the sector. Among our European neighbours, more than half of all new homes are built and commissioned by self-builders—about 60% in Germany and more than 80% in Austria. We must do more to facilitate that, which is why we have looked at our national planning policy framework for land to ensure that councils can assess and plan for the needs of people who want to build their own homes. I encourage my hon. Friend and the all-party group to contribute to the call by Nathalie Elphicke and Keith House for evidence on how to get and utilise more local authority land for building houses.
As has been mentioned, there is a real challenge in securing finance. We have launched a £30 million custom-build homes fund to provide repayable finance for larger custom-build developments. We have given self-build groups access to some £65 million under the affordable housing guarantee programme. We are engaging with lenders to ensure that there are more self-build mortgages available in the sector.
This Government now have a strong reputation for removing red tape. Self-builders are now exempt from the community infrastructure levy, potentially saving them thousands of pounds on individual projects. We have just finished consulting on a similar policy to change section 106 charges. We have also simplified design and access statements and made it easier to change the use of buildings to housing, which the industry has welcomed.
An important aspect is making sure that we can get advice out to consumers and developers. We have worked with the custom and self-build sector to launch an online portal to provide better information for self-builders. It has received more than 35 million hits and now attracts about 20,000 new users each month. That is fantastic progress and a clear demonstration of the interest in this sector. We were delighted to be able to secure Kevin McCloud as the new industry champion. He is doing an excellent job in raising public awareness of the benefits of custom-build. We have worked closely with the National Self Build Association to facilitate a range of new guides and advice to councils, developers and consumers on self-build and custom-build housing.
We have had some successes to date. There are up to 5,000 new plots in the pipeline and many new projects coming forward across the country, with thousands more to come. Some 60 councils have brought forward land and new initiatives, including Stoke, Cherwell, Woking, Hereford, Cambridge and Newcastle. We now have 26 lenders who are interested in this sector—10 more than in 2011. We have cut red tape, as I mentioned, and put portals in place to make sure that people have access to information. Making custom-build a mainstream housing option is very important for this Government, but we recognise that there is still a long way to go in doing so. The next step is to end the myths about this sector, and that will be a significant move forward.
In the Budget, we made some major commitments to driving this forward. I recognise and appreciate my hon. Friend’s comments about the consultation that is about to take place on right to build. That proposal recognises that some councils already provide land for custom-build, in response to local demand. We want to encourage that further. We will identify a small number of councils that want to act as vanguards to test how the right-to-build model would work in practice. We have been very generous, I might say, in providing £150 million in repayable finance. As he said, there is the potential for more if we can get the traction we need. The idea that we can recycle that money is extremely important. We want to get those shovel-ready plots out there delivering 10,000 custom-build houses.
Mr Bacon
My hon. Friend mentioned a couple of points that I want to test him on. The community infrastructure levy was removed from self-builders, rightly, although that creates a financial incentive for local councils to be less keen on self-build because they do not get the benefit. Does he agree that it is absolutely vital to hold the feet of local councils to the fire in fulfilling the duty that has now been placed on them to measure demand for self-build and to say what they are going to do about it?
Does the Minister also think that there is scope for encouraging enlightened national house builders with large land banks—some of which are at an advanced stage and some of which are less so—to make a proportion of that development available for self-build? If they did, they would probably sell them rapidly and that would encourage them to do more.