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Government introduce Right to Build scheme

Posted: 14/08/2018

Do you know that your clients have the Right to Build?

We all know that the government recognises the UK’s huge housing shortage. Are you aware that the government has made fundamental changes to legislation, with increased focus on self-build and the emerging custom build sector, which will inevitably increase enquiries and opportunities?

The Right to Build legislation grants a right to all qualifying citizens in England to register with the local authority, their desire to buy a serviced plot with a view to building or commissioning their own home. Local Planning Authorities must grant sufficient planning permissions to provide plots to meet levels of demand on the register within a 3 year period.

Learning from Europe and further afield, custom build brings a new breed of enabling the developer to the market, providing serviced plots with planning permission. Which makes finding a plot on which to build much easier than ever before and enabling more people to build their own home.

The government objective is for self-build and custom build to account for around 30% of new housing in England. Significantly changing perception, perspective and increasing opportunities for brokers in this specialist sector.

This is specialist lending, it is different from traditional purchase mortgages and is important to understand the factors involved to enable a suitable recommendation to be made.

Understanding:

  • The lender’s risk profiling – the property is the lender’s security, as it doesn’t currently exist, the lender will regard this as a higher risk during the build.
  • The construction types – Not only will this affect which lenders are able to provide the funding, it will affect the cashflow requirements.
  • Cashflow – The most important element is making sure that the funds are available when they are needed.

For self-build mortgages, funds are released as stage payments at key points of the build. Making sure that the funds are available in line with the requirements dictated by the construction type is key to a successful project.

Stage payments in Arrears or Advance – knowing what funds your client has available, along with who needs paying and when, will help to determine the most suitable approach.

  • Traditional arrears stage payments – means that the client must have the funds available to cover the cost of each construction stage before the lender reinspects and reimburses for work that has already been done.
  • Advanced stage payments – release funds ahead of each stage, based upon the cost of each stage of construction, enabling the client to have a positive cashflow, to pay for items as required.

Lenders’ criteria and the product features become predominant when completing research. The challenge is finding the most appropriate mortgage product. Sourcing systems have a “self-build” filter, but don’t ask any questions about the project, causing a daunting and time-consuming task of sieving through each lender’s criteria.

BuildLoan are the UK’s leading specialist in self-build, custom build, renovations, conversion and home improvement mortgages and totally dedicated to Intermediaries. With many lenders exclusively distributing their products through BuildLoan, not only do you and your clients get expert help and guidance throughout the project, you also have access to exclusive bespoke products available to intermediaries only.

If you have a customer who would like to take advantage of this fantastic new initiative then get in touch. Ingard in partnership with BuildLoan will guide you through the whole process, sharing our combined expertise to make sure that the right questions are asked. And that the construction type, costings and cashflow requirements are assessed, enabling the most appropriate mortgage to be selected. Reducing the risk to you, your client and the lender of anything going wrong.

Here to help

For more details, call Ingard’s Specialist Team on 01702 538 800 or arrange a call back.