| Real Life Strategies for Building Wealth

Did you know that in Germany to build a house is still considered a passage into manhood?

Of course, this is not the reason why John and I are thinking of building a house in the mountains of Bulgaria. We’ll build a house because of the flexibility for including custom features that this affords. Otherwise, it may be much easier to buy a house – there are many empty houses in Bulgaria, unfortunately – remodel it and be done with it.

The situation in the UK is entirely different. If Bulgaria has a lot of houses and not enough people, the UK has a large population and not enough houses. The National Housing Federation has estimated that at the moment there is a shortfall of about half a million dwellings.

This deficit is in the basis of the rising housing prices to prohibitive levels. To make a hard situation even more critical, construction levels have been falling over the last three decades.

In brief, at this very moment there is a whole generation who can’t even dream of buying a house and getting on the property ladder. This is a fact that Brexit is unlikely to solve (I know; I usually refrain from statements of political preference but this one could not be helped).

There is something that can alleviate this problem even if it doesn’t solve it: to build a house or have it built for you.

There is new research by Ipswich Building Society and the National Custom and Self-Build Association (NaCSBA) according to which 1 in 8 people in the UK believe they may show interest in building a house – or having it build for them – in over the next year.

Even more importantly, only 1 in 50 people (approximately 2% of the people interviewed) stated clear intentions to take the desire to build a house further by taking specific action; e.g. buying land, submitting a planning application or starting construction.

[If you’d like to learn more about the findings of this study, please have a look at the infographic below.]

It is not hard to understand why such a small proportion of people (assuming that the findings are representative) is to be expected to take action. It is not easy to build a house and it needs:

  • Money;
  • Planning;
  • Dedication;
  • Battling regulatory impediments; and
  • Project management skills to rival those of an Apple manager.

Still, there is some policy support for people who decide to build a house for themselves in the Self-Build and Custom Housebuilding Act also known as the Right to Build Act. For instance, councils are now required to keep a register of those looking to buy land in the local area; there is also the forthcoming Housing and Planning Bill which will require authorities to ensure they have sufficient number of plots to meet local demand.

This study found, however, that very few people are aware of these frameworks.

  • To this effect Paul Winter, CEO of Ipswich Building Society, commented, “At a time when much of the UK is experiencing a housing shortage, more needs to be done to raise awareness of this new legislation and encourage those looking for a new home to consider undertaking self and custom build projects.  Due to the complex nature of a self-build project, those seeking these specialist mortgages are advised to research the market and seek out a provider, and product, that best suits their individual needs and circumstances.”
  • NaCSBA Chairman, Michael Holmes, said:  “The success of the Right to Build Policy initiative, and the delivery of land to meet the huge pent up demand, depends on the registers. The research shows that 77% of people aren’t aware of the registers, nor what their success means to creating better new homes – this figure needs to change. NaCSBA is working hard to raise the public profile and support councils across the country to ensure that they have the correct measures in place. Currently, only 35% of LPAs have adopted a register and our aim is to get this to 100%.”
  • Raymond Connor, CEO of BuildStore, commented, “The research shows there is a significant gap between those interested in self-build and those who intend to take specific action to progress self-build projects.  However, it is likely this sector will soon grow once more people are aware the main challenge of finding a suitable plot of land has now been simplified.  This is thanks to the new Right to Build legislation, which is both innovative and unique in Western Europe.  It’s an exciting time to be involved in self-build, and we’re looking forward to working with local authorities, landowners and lenders to enable more people to exercise their Right to Build.”

Apart from the policy and regulatory framework, there is also the matter of money. It can work out cheaper to build a house (have a house built) but it still requires substantial funds which very few people have readily available. There are already mortgages for self-build housing projects available; we know that Ipswich Building Society, among others, offers one.

Building a house is not a walk in the park. If you belong to the generation that cannot even dream of buying a house it may be well worth considering.

I believe that there are two things that make it worth considering:

#1. Lower cost. I can’t tell you how much the house you would be building will cost; this will depend on so many characteristics, including whether and how much of the work you do yourself. There are some nifty calculators; just google it. There are estimates that a house will cost you half what it would cost to buy if you build it yourself (do quite a bit of the work yourself). Remember what I told you about the passage into manhood?

#2. Great degree of flexibility. You can design it anyway and any size you want – you don’t have to compromise your dreams about your home if you build a house (have it built for you).

#3. Working for the common good. The way things are going, it seems to me that taking the matter of building houses to individuals is the only way we’ll have new houses built in the UK.

Finally…

To build a house is a challenge but it is one worth taking for the saving and the flexibility of choice.

We are doing it and believe that you should consider it as well.

How do you feel about building a house? Would you do it and what help would you need?

build a house