2010: The Year to Self-build?

ABOVE: Design made to last - Ironically, recession tends to drive forward design, as people invest in quality in the hope that it will last the distance, as well as feel an increased desire to immerse themselves in more aesthetically pleasing surroundings. Design ingenuity also blossoms as people look for more cost-effective solutions to problems. See this house in full in the May 2010 issue.

So, aren’t you glad 2009 is over? One of the worst economic climates in decades contributed to a tough year for self-builders and renovators, although it was also coupled with enormous opportunity.

The construction industry as a whole saw a massive downturn, with thousands of UK tradespeople unemployed, and foreign workers returning to their native lands. Amidst all the drama, however, self-builders managed to hold their own: “The downturn in the self-build market has only been half as bad as that in the rest of the construction industry,” says Peter M Keogh, Technical Manager at package company Custom Homes (customhomes.co.uk). The biggest problem, he says, is not the number of people able to take on a project but the limited availability of mortgages: “The stricter lending criteria means that there are lots of plots out there with planning permission but self-builders without the finance to build on them. Once the banks start to relax their mortgage requirements over the coming months, we expect to see a surge of self-build starts.”

Where Custom Homes has seen a big boom is in home extensions: “We’ve had a real increase in the number we’re building. More people are also extending upwards to add an extra storey, and we expect this trend to stay strong in 2010.”

Package company Design and Materials has found that new clients are much more committed than before: “In normal market conditions a wide range of prospective selfbuilders approach us about building their own home,” says Beverley Pemberton, Head of Design. “Some are less committed than others and inevitably a proportion drop out in the early stages for a variety of reasons. What we have noticed over the last 18 months or so is that the new clients we have taken on are fully committed and looking to build at the earliest opportunity. An indication, I think, of their awareness of current favourable market conditions.”

While the economy has undoubtedly had a huge impact over self-build and renova - tion, it’s not the whole story. There are plenty of big changes in the pipeline set to have an impact. 2010 is a new year and a fresh start — so what does it bring?

The era of the bargain plot: At the time of going to press, the House Price Index reports that the average house price in England and Wales stands at £159,546, down from its height in January 2008 of £184,203 – albeit with some small peaks and troughs along the way – and this is a fall that is, on the whole, reflected in plot prices. “In a falling market, building plots take the brunt,” says Stephen McOwan, Head of Property Sales and Acquisitions at George F White (georgefwhite.co.uk). “If the rest of the market has fallen by, say, 20%, a plot will have fallen by 30%-plus, because developers have to take the drop in value of the finished property into consideration.”

This opinion is shared by Vicky Baylis of landfinding service Plotfinder.net (plotfinder.net): “Plot prices dropped during 2009 – to the lowest we have seen for the past few years – simply because plots have been staying on the market, unsold, for much longer.”

There are, however, two mitigating circumstances, as Stephen explains: “In more desirable locations, plots are hard to come by so these opportunities will hold their value. The other issue is that, unlike houses, people often don’t have to sell plots, so are holding onto them until the market picks up.”

Mortgages will still be tight: Money is still available — to those with healthy deposits, and typical loan-to-value (LTV) ratios are around 85%. David Murphy, Director of Sales & Marketing at BuildStore Financial Services (buildstore.co.uk), believes that self-builders and renovators need to look to a specialist lender in order to get a self-build mortgage: “Lenders are looking for ways to reduce risk, so are increasingly turning to specialists to help them not only keep close to a borrower during a project, but also add expertise in terms of helping borrowers identify their cash flow requirements while planning and preparing for the project.

“BuildStore’s exclusive Accelerator advance-stage payment scheme, which gives positive cash flow during a project, will be used by an increasing number of lenders, particularly the regional Building Societies. “Lenders are looking for higher deposits, so 85% lending on land costs and build costs is more common these days. As far as loan to final values are concerned, traditional self-build mortgages currently sit at around 75% LTV, and BuildStore has agreed LTVs of up to 80% with a number of lenders through the Accelerator mortgage.”

It’s cheaper to build: With so many construction firms out of business, there is more labour on offer to self-builders and renovators than there has been for a long time, and the cost of materials has also taken a hit. “Construction prices have fallen and will continue to fall next year. For the selfbuilder this should mean that tradesmen will be more readily available and more willing to negotiate on price than in recent years. Similarly materials merchants will be eager for turnover and bargains should be available,” says Joe Martin, Executive Director at BCIS (Building Cost Information Service of RICS).

ABOVE: The house of the future? A unique zero-carbon house has been built in inner-city Birmingham, to meet the stringent requirements of Level 6 of the UK Code for Sustainable Homes. Designed by John Christophers of Associated Architects, the family home is built around an existing redbrick Victorian house, left intact. Could this be the solution to updating our old housing stock?

Renewables will come of age: Imagine not only producing enough electricity to put a significant dent in your home’s running costs, but also making a second income by installing renewables. Well, from April 2010, you can. The current grants system (where you can apply for a maximum grant of £2,500 for up to three installations of renewable technologies) is being replaced with Feed-in Tariffs (or FiTs) — meaning those who install electricityproducing renewables will actually make a profit of anything up to 36.5p/kW (up to a 5mW limit). This includes biomass power and combined heat and power (CHP), hydro-power, solar photovoltaics and wind power. Heat-producing renewables (such as heat pumps) will not be included, but will instead fall under a Renewable Heat Incentive to come into place in 2011.

Those self-building in 2010 are set to become the main beneficiaries, as the level of the tariff applicable to systems installed will decrease over time, in line with annual ‘degression’ rates (7% every year for PV and 3-4% for some types of wind power). Once you’ve been allocated a tariff, that rate will apply for the full term (25 years for PV, 20 for everything else).

Regulations are changing: Currently in consultation, the Building Regulations are set to place a far greater emphasis on reducing CO2 emissions, as of October 2010. A new SAP calculation will be put in place and, to achieve a Pass the SAP must show a minimum 25% reduction on CO2 emissions compared to the 2006 Regulations. “These changes to Part L, in particular, will drive further focus onto energy efficiency,” says Tim Pollard, Head of Sustainability at Wolseley (wolseleysbc.co.uk). “But there are several regulatory mechanisms which are driving the sustainability agenda forward, including the recast of the Energy Perform - ance in Buildings Directive and the up-andcoming Renewable Energy Strategy.”

Planning will be easier: “Local authorities are not exactly swamped with planning applications,” says Beverley Pemberton from Design & Materials (designandmaterials.uk.com). “The upshot being that it’s taking less time to obtain an approval — historically a frustrating factor.”

Recent new legislation to remove red tape from the system also helps. David Hand from Planning Portal (planningportal.gov.uk) explains: “Some of the most frustrating things blocking projects going ahead are the inability to agree minor amendments to schemes or to extend the length of a planning permission. At the end of 2009 the Government introduced two new consent regimes to allow minor non-material amendments to existing permissions and also to allow an application for an extension of time on all live applications.”

Ugly ducklings take off: While there aren’t quite enough dream building plots and beautiful period properties, just begging to be lovingly renovated, to go around, there are certainly plenty of ‘ugly’ houses from the ’50s, ’60s and ’70s on offer. A change of cladding and windows can make the world of difference, and as the public cottons on, this trend for remodelling is making a big comeback.

“People have been giving new faces to old properties for hundreds of years — it’s nothing new,” says Sarah Beeny. “Don’t forget that in the ’70s, Victorian homes were unfashionable and seen as undesirable. That’s why so many people got rid of all their original features.”

It’s time to invest in design: ‘Buy cheap, pay twice’: the mantra our parents have been spouting for years is gradually hitting home. “People are looking for longevity and are now seeing quality as a way of saving money,” says Alan Hughes, Vice Principal of the Interior Design Faculty at Inchbald School of Design.

“Reclamation and antiques businesses are also doing very well, as people want something that has already proved itself. People want something that has quality, a sense of history and isn’t too flashy.”

According to Alan, design is set to become less minimalist in 2010. “Historically, when money has been tight, the inclination was to go for more conservative design, but it’s not really like that now, which is nice. People don’t want to things so austere any more.

Further reading:

• 2010: The Year to Self-build? - Expert Opinions
• All About Self-build
• Voice your opinion about the future of self-build in the Homebuilding Discussion Forum