MP’s custom-build report warns of political unrest without urgent reform

The recommendations in detail

Recommendation 1: Greater role for Homes England

The Government should create a new Custom and Self-Build Housing Delivery Unit within Homes England to enable the creation of serviced building plots on small and large sites and support the delivery of custom and self-build housing (CSB) at scale across the country. To deliver this, Homes England would:

a) Establish a CSB Housing Delivery Unit which would procure and dispose of serviced building plots on public and private land, working with SME builders and taking account of market demand, underpinned by a clear procurement framework and delivery strategy agreed with Ministers, with an ambition to include CSB on all large sites as part of the housing mix;

b) Direct investment into CSB enablers, Development Corporations and Local Authorities and ensure strong CSB representation on the new Dynamic Partnership System for public land procurement;

c) Launch the new Help to Build Equity Loan by September 2021;

d) Work with the Ministry for Housing, Communities and Local Government and One Public Estate to extend and simplify access to the Brownfield land release fund for the creation of serviced building plots;

e) Retain access to the Home Building Fund for CSB projects and ensure the Community Housing Fund remains effective and targets the right projects; and

f) Work with the proposed ‘Centre of Excellence’ for Modern Methods of Construction to promote effective CSB delivery.

Recommendation 2: Raise Awareness of the Right to Build

The Government, working through Homes England in partnership with the custom and self-build industry, should create a custom and self-build housing Show Park and should strengthen existing legislation to mandate the wider publicity of Self-build and Custom Housebuilding Registers and the sharing of key data between willing landowners and people on registers. To deliver this, the Government would:

a) With the support of Homes England and in partnership with the CSB industry, establish a Destination Show Park and Hub with Show Homes (preferably on public land or with a willing landowner) which can showcase manufacturing and assembly capabilities and has meeting space facilities, designed to sell the Show Homes as part of a new neighbourhood over time and with the ambition to develop further Destination Show Parks as the CSB sector grows;

b) As part of Recommendation 5(g), mandate that ‘relevant authorities’ widely promote their statutory Self-build and Custom Housebuilding Registers and that they share demand data and information on suitable development permissions between willing people on the register and landowners and project promoters;

c) Launch a consumer marketing campaign and associated website providing public information on:

• Custom and Self Build Opportunities with links to all partners bringing forward serviced plots for custom and self build on public sector land, including opportunities for people to join community-led housing schemes and affordable CSB schemes via Community-led Housing Hubs

• Help to Build Loan Fund with links to partners offering the Help to Build Equity Loan and information on the scheme

• Right to Build Registers to explain how Self-build and Custom Housebuilding registers work for individuals and associations of individuals, with links to all local authority Registers and published performance data for each local authority

• Show Homes with information on where the public can visit CSB show homes and how to book a visit

Recommendation 3: Support Community-Led Housing, Diversity of Supply and Levelling Up

The Government should reignite the successful Community Housing Fund; create accessible opportunities for communities to help themselves by introducing a Self-Help Housing Programme; and introduce a Plot to Rent Scheme. To deliver this, the Government would:

a) Offer targeted funding to support the growth of Community-led Housing Hubs and consolidate support and responsibility for Community-led Housing into the proposed new Homes England Custom and Self-Build Housing Delivery Unit, with a boosted funding model;

b) Make Community-led housing an integrated part of the Affordable Homes Programme (AHP) with predictable long-term finance and an ambition to allocate 10% of annual AHP funding to empower low income and often marginalised people to become part of the solution to their own problems, which could include:

• Funding local specialist registered providers with a focus on CSB to buy suitable sites and act as project enablers; and reinforcing the strength and success already demonstrated by the Community-led housing Hubs;

• Creating a Small Sites Programme as a new umbrella for the plethora of small and often overlooked sites owned by housing associations, encouraging the use of Local Development Orders extending over clusters of small sites to eliminate planning risk, while ensuring that a wide range of participants have access to the sites, including community groups, co-operatives, co-housing groups and individuals.

• Enabling people to build their own homes using ‘sweat equity’, under supervision, while creating and fostering local opportunities for employment, training and enterprise;

• Offering repayable loan finance to suitable charitable organisations – such as Housing People, Building Communities; Leeds Community Housing; Wigan Armed Forces HQ; and many similar groups across England; and

c) Introduce a Plot to Rent Scheme with a Rent-Now-Buy-Later option, modelled on international experience.

Recommendation 4: Promote Greener homes and more use of advanced manufacturing

The Government should recognise and support the pathfinding role of the custom and self-build housing sector in advanced manufacturing and in greener homes to accelerate the delivery of its wider Modern Methods of Construction and Net Zero Housing ambitions. To deliver this, the Government would:

a) Ensure that CSB is embedded into the work of the new Modern Methods of Construction Task Force and its actions and that this work in turn supports the growth of the missing market for customisable housing;

b) Ensure that the momentum towards achieving Net Zero house building is sustained by working with the custom and self-build sector to address the current constraints with regard to increasing the safe use of timber in low rise housing, learning from significant progress already made in Scotland;

c) Recognising strong investor interest in Environmental and Social Governance (ESG), encourage innovation and realignment towards use of greener building materials, while raising awareness among lenders, valuers, and insurers of the environmental benefits of CSB compared with existing housing stock;

d) Encourage greener mortgage product design and changes to mortgage affordability calculations to reflect the expected energy costs of a new home rather than the average energy costs for an existing home, and in doing so support greater initial investment in greener homes; and e)Sponsor and support research and engagement with organisations such as the Manufacturing Technology Centre and others, to apply more effectively the engineering insights and learnings already available from the aerospace and automotive sectors to the way in which houses are constructed.

Recommendation 5: Support Custom and Self-build housebuilding through the Planning Reforms

The Government should ensure that the planning reforms in its White Paper Planning for the future maximise the opportunities for access to permissioned land for CSB across all tenures, including making focussed changes to the Right to Build legislation to ensure that it achieves its objectives. To deliver this, the Government would ensure that the forthcoming planning reforms:

a) Extend the opportunities for the specific designation of land for CSB housing in the proposed area-based planning system, using Design Codes for CSB housing across all appropriate designations;

b) Set a target for local planning authorities to provide for serviced plots unless market demand (not Register demand) can be shown to be regularly met and there are deliverable allocations in new style local plans to meet this demand;

c) Give substantial weight to CSB as a material consideration in the revised National Planning Policy Framework;

d) Facilitate local authorities to take a more interventionist approach to bring forward land for CSB and SME home builders by running pilot programmes to support councils in land assembly to create serviced building plots for new housing as part of the new-style local plan land allocations process

e) Ensure assembled sites come forward quickly and are deliverable and plan-led, by enabling new-style local plans to be partially amended through the designation of a Land Assembly Partnership Zone or Area; embed the learning from the pilot programmes and roll the process out nationally by:

(a) setting out in guidance/policy or a suitable statutory instrument the assembly process which should be followed, similar to Guidance on the compulsory purchase process; and (b) provide ongoing favourable loan funding to service and assemble the sites, which is repaid when plots are sold;

f) Allow minor changes to new style local plans following a streamlined process, if a development on the edge of a settlement/urban area provides for small scale CSB plots, and for councils to set locally-specifc policies for this;

g) Make minor changes to the Self-build and Custom Housebuilding Act 2015, where possible through secondary legislation, to clarify the defnition of custom and self-build housebuilding; what counts towards giving suitable development permissions and how the ‘duty to provide’ is measured; remove the use of fees and eligibility criteria;

introduce a clear sanction if the demand on the registers is not met; and link under-delivery to the Presumption in Favour of Sustainable Development (or its replacement under the planning reforms); ensure there is an obligatory annual monitoring requirement placed on authorities; and, clarify how planning obligations can be used to secure CSB development in planning terms, including how plots should be marketed before they are able to be built out for market housing;

h) Introduce a targeted exception and windfall site policy which enables custom and self-build housing on unplanned housing sites in rural areas and on sites adjacent to existing settlements; and

i) Introduce a commitment that Government will publish annual monitoring data of demand on Self-build and Custom Housebuilding registers and delivery against meeting this demand, for each relevant authority.

Recommendation 6: Iron out any tax creases

The Government should investigate the perceived disadvantages in the tax system between the CSB delivery model and other forms of housing, identifying specific actions where necessary to neutralise them. To deliver this, the Government would:

a) Engage the Treasury and HM Revenue & Customs to work with the CSB sector to identify any potential imbalances in the tax system which may disincentivise serviced plots for custom and self-build housing;

b) Consider the actions needed to address any issues identified, with due regard to any fiscal impact and wider implications of any changes;

c) Give guidance to Councils to clarify how they can treat the creation and sale of building plots for VAT purposes;

d) Recognise that there are unintended challenges in applying the current Community Infrastructure Levy ‘self-build’ exemption to CSB apartments, terraces and semi-detached homes and work with the CSB sector to identify ways in which such forms of CSB can benefit from the exemption, as part of the Government’s review of developer contributions.