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Self-Build Market Worries Despite New Opportunities

There continues to be a lower rate of submission for self-build planning applications for new residences. Less than 18,000 were submitted for approval in 2015, which is 30% below the historic peak attained back in 2010.

Recent data released by Barbour ABI, prominent analysts for the UK construction industry, indicates that in 2015 self-build planning applications were at their second lowest figure for eight years, with only 2014 showing worse returns. These numbers are especially surprising considering the turn-around within the housing market that has been observed over the last two years.

On average, the custom-build industry for homes takes in £4b a year and makes a substantial contribution to the national economy. In October of last year, the UK Government issued a Housing and Planning Bill intended to galvanise a nationwide transformation from ‘generation rent’ into ‘generation buy’.  A goal was established to facilitate the construction of 20,000 self-build homes a year by the end of the decade.

Michael Dall, Barbour ABI lead economist, commented that the news about low self-build planning application levels is not encouraging, given the fact that the UK Government has supported a £350m boost to self-build funding and vowed to eliminate the main obstacles to project completion.

Mr Dall added that in light of recent changes, such as local councils making more land available for self-build purposes and an increase in available grants, there should be a corresponding increase on this year’s projected number of self-build applications. While the small 2015 increase is slightly encouraging, it will be awhile before properties of this type make any real impact on the UK housing crisis.

Reminding industry watchers of the Government’s declared goal to double the amount of self-built homes in the UK by 2020, Mr. Dall said that it remains to be seen whether the recent elimination of red tape will see more properties built.

Every year, thousands of people build their own homes in the UK. Self-build is regarded as a more accessible route to a new home, and those who choose this option pay a relatively low amount of Stamp Duty Land Tax, which is only due on the value of the land. Anyone buying a plot priced under the current threshold will not pay stamp duty, regardless of the final value of the completed property.

Specialists in Construction Insurance

Self-building also results in VAT savings. Costs for labour on new build homes are zero-rated for VAT, but once the home has been completed, owners can reclaim the VAT charged on many of the building materials. When that scenario is compared to a traditional renovation, where materials and labour are both taxed at 20%, the overall savings are significant.

For decades, self-build properties have been a housing market fixture in countries such as Australia, Belgium, Germany, and Japan, where around 60% of new homes are constructed by those who intend to live in them. The UK continues to lag behind, despite the possible solution that self-build represents to the UK housing crisis.

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