BuildStore CEO Raymond Connor says, “We need to review what custom build really means.”
Over the past 12 months, custom build has been a buzzword within our industry. However, not much has happened over the last year. This was down to the fact that there were very few companies within the wider property sector that knew much about the market’s potential.
However, the recent Housing White Paper, which has effectively given government endorsement to custom build, has had an enormous effect and brought this route to homeownership to the forefront of people’s minds in the industry.
Since the Paper was published we, BuildStore, have had renewed interest from lenders who are attracted to custom build due to the assistance that professional developers can offer to purchasers.
We are in the process of speaking to a variety of lenders about what custom build entails, and the advantages of entering the market. However, the question always asked by lenders is: “What is the difference between self-build and custom build?”
Each month we seem to have a more firmed up view that custom build is all about developer involvement, with developers providing the opportunities.
The enabled self-build route
From a personal point of view, I don’t necessarily agree with this. My own opinion is that the main market for custom build is going to be enabled self-build – the serviced plot route, sometimes referred to as the ‘Golden Brick’ method.
I think that this route will most appeal to those interested in creating their own home, who may otherwise have self-built. It’s my view that companies which set up businesses to provide enabled building opportunities will be very successful.
The counter argument to that, which I fully acknowledge, is that enabled schemes appeal to the market that we know (potential self-builders). But it is possibly not as attractive to the market that we don’t know so well – those who would have otherwise bought a new home from one of the big housebuilders.
The problem is that people are immediately looking at custom build and thinking it is developer led, rather than it being enabler led – and this isn’t necessarily what’s best for growing the market.
A clearer picture for consumers
It would be useful if we had an industry review of custom build parameters, which reflects the evolution of self-building.
This should include reviewing the differences between the work of an individual building their own home, what is offered by enablers with serviced plots, and what developers can provide.
We need to accept that this is a process and there are stages of development in the custom build market, only then can we can look at what the developers could and should be offering.
People are attracted to custom build because they want to have choice in the design of their homes. The larger custom build sites that we see should be providing for this, and it is something that the serviced plot model can offer.
This is the market where we could see huge amounts of growth over the next few years. The success of this model will in turn will be the catalyst for the housebuilders and SME enterprises to create their own successful custom build market.
In terms of new lenders coming to the custom build sector, there is an insufficient number of sites coming to market to really warrant any major lending increase at this stage. It would be detrimental to the industry if a flurry of lenders were to enter the market too early, and then end up leaving as there are not enough sites out there.
It’s a bit of a Catch 22 situation. The developers I speak to want to ensure that there is sufficient finance available for them to launch into custom build as they see it, and the lenders want to see more developments launch first to know if they should create a product to suit this type of development.
The problem is that these new lending products cost a lot of money to bring to market, especially if you are not already in the self-build sector.