Help to Build scheme — Everything you need to know

Key information
  • Help to Build applies to custom or self build homes in England only
  • A £150 million scheme to make self-building more affordable
  • The scheme is set to run until at least 2024
  • You’ll be able to get a self-build mortgage with only a 5% deposit, instead of the usual 20%

According to research by the National Custom and Self Build Association, around 1 in 3 British adults have ambitions to build their own home. But of those, 59% said that finding the money to fund the project was their biggest barrier.

That barrier is the reason behind the government’s new Help to Build scheme, which aims to make custom and self build homes more accessible and affordable. But what exactly is the scheme, and what help does it offer prospective self builders? In this guide we’ll take you through everything you need to know about Help to Build, and how it can bring your dream home a step closer to reality.

What is Help to Build?

Announced in April 2021, the Help to Build scheme is a £150 million government fund set up to reduce the upfront costs associated with self-builds. This should be hugely beneficial to first time buyers, young people, and those on lower incomes trying to get onto the housing ladder.

In 2020, the average cost of a self or custom build home in the UK was £460,000, with £190,000 of that accounting for the land and the rest for the build itself. Housing Secretary Robert Jenrick says the Help to Build scheme aims to change that, making self-building a “mainstream, realistic and affordable option for people across the country”.

As well as helping self-builders, the scheme is also set to boost the housing sector. It's hoped that self-builds will create between 30,000 and 40,000 new homes a year — compared to just under 16,000 in 2020 — and also increase business for small building firms.

How will the payments work?

Payments

As Help to Build was only recently announced, not all the specifics have been laid out yet. But what we do know is it will involve taking out a government-backed equity loan similar to Help to Buy.

This equity loan scheme will enable people to get a self build mortgage with a deposit as low as 5%, rather than the usual 20%. With less money required for an initial deposit, the scheme significantly lowers the financial bar for custom and self builders.

The government hasn't yet released details about how those loans will be repaid. If Help to Buy is any indication, you'll start paying interest on the loan after five years. You won't pay back the equity loan itself until you either sell your property or pay off your mortgage.

But remember, this is only a reference based on the current Help to Buy scheme, and it’s not necessarily how Help to Build will operate.

Before you set your plans in stone

It's not known if the Help to Build scheme will only apply to those building their first property, or if there will be an upper cap on the value of eligible housing projects. But these questions will be answered in the coming months as more details are confirmed.

Another thing to keep in mind is that the Help to Build loan doesn’t protect you from the infamous self build problem of going over budget. You’ll still need to set aside contingency finances for if things go wrong. For more on the expenses you might have to plan for, see our guide: How much does it cost to build a house?

While the exact details of Help to Build still need to be confirmed, the scheme will still be welcome news for those looking to build their own home. By reducing the amount of money you need to start, hopefully it can bring you one step closer to realising your housebuilding ambitions.

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Addland
Published: 25 May 2021
Last updated: 26 May 2021

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