Brian Kilroy is business development manager at BLP Insurance
The whole industry – builders, tradesmen, materials manufacturers and suppliers – should be grabbing the horns of the latest Lloyds Banking Group self-build scheme and getting behind it as a way to bolster much-needed growth across the whole construction industry. If managed well, it could go a long way to helping the sector get moving again.
We applaud any initiative that makes it easier for aspiring self-home builders to fulfil their ambitions. The recession put many people off making such a large investment of time and money in their home and with many lenders shying away from the self-build market access to funding was hard to come by.
Funders are catching up and this scheme shows that lenders are now starting to catch the wave of growing confidence in construction and new home building generally.
Helping hand
Local Authorities now have a duty to step up their game and if they play it right, they can use it as an effective strategy to help hit their housing targets. We’ve seen some movement in the Private Rented Sector arena, but local authorities also need to recognise private developers and the burgeoning self-build and custom build markets.
Self-build gained more government support last year and local authorities have started to get behind the market by relaxing planning rules and regulations to some degree. This is a good start, but we desperately need measures that are more tangible to help us to see more projects coming to fruition.
Building your own home is a big project to undertake but the rewards can greatly outweigh the hoops that homeowners need to jump through to make it happen. Self-building provides the opportunity to build the perfect home to suit your lifestyle and put your own stamp on something and help is at hand to guide you through the process.
Protect yourself and de-risk
Lenders need to remember that it’s not just about finance and the mortgage holders ability to pay but it’s also crucial to ensure the new home is built correctly. This also helps to de-risk the lending by making sure that the asset is solid.
As construction picks up pace, self-builders and lenders need to be wary of the risks and if we’re not careful, the shortage of labour and materials could become a bigger problem than lending. Cheap, inexperienced, but available, labour coupled with a shortage of traditional materials can reintroduce risk back into the equation for lenders.
Lenders have a vested interest in alternative methods of construction and need to ensure that the end product is fit for purpose and has long term saleability. Initiatives like Build Offsite Property Assurance Scheme (BOPAS) can help take away that risk and augment any growth in lending while ultimately bridging the housing shortfall.
A recent survey conducted by BLP Insurance found that 55% of homeowners would be keen to undertake a self-build project, a 5% increase since 2013. Some 57% of those homeowners who would consider building their own home blamed lack of available funding as the biggest thing stopping them from getting started.
