The Intermediary – April 2025 - Flipbook - Page 22
RESIDENTIAL
Opinion
The rising influence
of self-build
S
elf-build continues to
play a modest but crucial
role in expanding and
diversifying the UK’s
housing stock, offering
a viable and aractive
alternative to the mass-produced
homes that dominate the market.
By enabling individuals to design
and construct properties tailored
to their needs, the self-build sector
nurtures innovation, sustainability,
and architectural variety. All of which
are becoming far more appealing
to a new generation of potential
homeowners, and for those looking to
leave a lasting property legacy.
With a host of Government
initiatives aiming to streamline
planning processes and improve land
availability, this is a sector which
is also poised for further growth,
offering new opportunities for
mortgage intermediaries to support an
increasing number of clients looking
to build their dream homes.
Government reforms
The UK Government has recently
introduced the Planning and
Infrastructure Bill, designed to
simplify the planning system,
accelerate infrastructure projects, and
support the construction of 1.5 million
homes by 2029.
Key reforms include:
Faster approvals: Reducing
bureaucratic barriers to speed up the
approval process for housing and
infrastructure developments.
Community incentives: Offering
energy bill discounts to residents
living near new developments such
as electricity pylons.
Environmental measures:
Establishing a ‘nature restoration
fund’ to encourage sustainable
building practices.
Decision-making changes:
Allowing planning officers
to approve more applications
and reducing council
22
The Intermediary | April 2025
planning commiee sizes to
expedite decisions.
DAVID LOWNDS
is head of products and
marketing at Hanley
Economic Building Society
For the self-build market, these
reforms could potentially lead to
quicker planning approvals, greater
land availability, and enhanced
financial incentives for eco-friendly
builds. As a result, self-builders may
face fewer delays and more options to
create energy-efficient, sustainable
and personalised homes.
Unique funding
Unlike traditional residential
mortgages, self-build loans operate
on a staged payment system. Instead
of receiving the full loan amount
upfront, borrowers access funds
in phases aligned with different
construction milestones. This
structure ensures financial stability
throughout the project and minimises
the risk of overspending.
Key advantages include:
Cost savings: Self-builders oen
save on labour and materials
compared to purchasing a home.
VAT refunds: Many building
materials qualify for VAT relief,
reducing overall project costs.
Flexible payment structures:
Some lenders offer interest-only
options during the construction
phase to improve cashflow.
Supporting borrowers
Self-build remains a niche market,
meaning advisers may not frequently
encounter clients seeking this type of
mortgage. However, understanding
its complexities is vital to any
future growth.
Not all lenders provide self-build
mortgages, so intermediaries must be
familiar with those that do and their
specific criteria. This is especially
apparent for building societies that are
active in this area of lending.
Considerations for advisers:
Lenders require detailed project
plans, cost breakdowns, and proof of
planning permission before
approving a mortgage.
The type of construction method
and property design can impact
loan approval.
Borrowers must ensure they have
a warranty provider in place
before applying.
For mortgage intermediaries,
partnering with a building society
specialising in self-build lending can
provide invaluable support in securing
appropriate finance for clients.
These lenders offer expertise,
resources, support and bespoke
solutions, ensuring that
intermediaries can confidently guide
borrowers through the complexities of
self-build homeownership.
The future
The self-build sector is gaining
momentum, with a growing number
of lenders introducing tailored
products to meet rising demand.
Many of these offerings emphasise
sustainability, aligning with
increasing consumer and regulatory
focus on energy-efficient housing.
By staying informed about market
developments and lending criteria,
advisers can help borrowers navigate
the complexities of self-build
finance and turn their property
ambitions into reality, as more and
more opportunities self-build arise
across the UK. ●
