HELP to BUILD EXPLAINED
A new government-backed equity loan scheme has launched that could make creating a bespoke home a viable route for 1,000s more people by making it easier to access self build mortgages. Here’s how it works
The Help to Build equity loan has the potential to make commissioning a bespoke home a mainstream route onto the housing ladder for firs-ttime buyers
On 27th June this year, the government opened the ground-breaking new Help to Build equity loan scheme. Administered by Homes England, Help to Build is designed to enable many more people to easily fund their self build or custom build project – and is set to make commissioning your own home a more affordable, accessible and mainstream choice, particularly for those with smaller mortgage deposits.
Following hot on the heels of Richard Bacon MP’s review of the custom and self build (CSB) sector, which has received a warm reception from government, Help to Build has the potential to be the cornerstone of a wider-ranging package of measures addressing challenges in areas such as land-finding and planning. Ultimately, the goal is to deliver more choice and quality to consumers through self and custom build.
What is Help to Build?
Available in England, the scheme is inspired by the Help to Buy, which was aimed at those looking to purchase new mass-market developer housing. Help to Buy closes to new applications in October this year, so CSB will soon be the only route to a new home that benefits from a government-backed equity loan.
Help to Build will enable people with smaller savings (the minimum deposit will be 5%) to access self build finance. Unlike conventional mortgages, self build versions pay out in stages linked to the progression of work on site – so you know you’ll have the money when you need it (find out more on page 92). A standard self build mortgage currently requires a deposit of around 15%, so Help to Build significantly lowers the entry barrier to creating an individual home. It achieves this by offering government-backed loans of up to 20% (or up to 40% in London) of the land and construction costs, boosting the power of your own deposit.
The Help to Build equity loan is available for a range of schemes, including self build, custom build and residential conversions. You can only use the loan to construct one house, and it must then become your primary home. You cannot use Help to Build to renovate an existing property you already own. According to Homes England’s customer guide, eligible projects include: