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Help to Build Scheme

Fed up with renting and paying someone else’s mortgage? Want to buy a house in an area you love? Struggling to get on the housing ladder due to rising costs? Have you considered the new government Help to Build scheme?

What is the Help to Build scheme?

The Help to Build scheme is a government initiative conceived by the Department for Levelling Up, Housing, and Community (DLUHC). It’s designed to increase funding for the UK self-build construction sector and make it easier for people to design and build their own homes.

The UK construction sector has always relied heavily on large house building projects to provide the country’s homes. Compared to other countries, self-build and custom-build properties take up a tiny percentage of the UK’s housing stock.

This initiative looks to reverse this trend and, in the process, open up more opportunities for the public and workers in the construction industry.

How will the scheme work?

Applicants to the Help to Build scheme will apply for a government-backed loan to assist with the house building project.

The loans will be valued between 5% and 20% of the estimated value of the plot of land and build cost combined. The percentage will rise to 40% for projects based in London.

The maximum cost of a Help to Build project is £600,000. This figure must include the cost of the land and the cost of the build. The cost of the build itself cannot exceed £400,000.

Once the project is complete, the loan must be paid back in the same way as a regular mortgage.

Visit the government website for more details.

Who is the scheme for?

Help to build scheme

The scheme was initially devised to help people with specific needs build a home to meet their living requirements. This could include people with disabilities, those with extended families, or people living with elderly relatives.

The scheme, however, is also open to the general public and anyone who is interested in an alternative route to home ownership.

Help to Build funding can be used to fund a variety of construction projects:

  • Buying a plot of land
  • Building a new home
  • Building an airspace development flat (a new home built in unused space above an existing building)
  • Converting a commercial property into residential accommodation
  • Customising a shell build
  • Demolishing an existing building to build a new home

The scheme launched on Monday 27th June and is set to run for four years.

Help to Build – political background

According to a House of Commons’ report, the government needs to build around 300,000 new homes each year to meet the country’s housing needs. It is currently falling way short of this target with an estimated 200,000 new homes built in 2021.

To tackle the UK’s housing crisis, MP Richard Bacon set up an independent review into the UK self-build sector. The findings of the review stated that the self-build sector could realistically contribute 30,000 to 40,000 new homes each year. A specialist government department has now been set up to manage the Help to Build project.

Self-building costs

help to build scheme - self build

To self-build a house in the UK can cost anything from £126,000 right up to a massive £600,000. The cost of self-build properties is obviously affected by numerous factors, two of the most important being the size of the property and the location.

To get a more accurate idea of self-build costs, it’s perhaps better to look at the costs per square metre. These can range from £1,400 to £3,000 with an average cost of £1,800.

Have a read of our self-build cost guide for more detailed information about what to expect.

How much does it cost to build a house?

Mortgage rates for self-build projects

To access Help to Build funding, you must firstly secure a self-build mortgage from a Help to Build registered lender or broker. Anyone over the age of 18, with the legal right to live in England can apply for the loan and the applicant must agree to live in the home once built.

Mortgage rates for self-build properties are generally higher than on standard homes. According to the Online Mortgage Advisor, a standard residential mortgage has an interest rate of between two and four percent. This increases to between four to six and a half percent on self-build loans.

Self build mortgage advice, rates & providers

Help to Build loan explained

The Help to Build loan can be used as an equity loan against your mortgage repayments. For the first five years, zero interest is paid on the Help to Build equity loan. In year six, you will need to pay an interest rate of 1.75%. From year seven onwards, the interest rate will be affected by the Consumer Price Index (CPI) rate of inflation.

The formula used to calculate the new rate involves taking the CPI rate of inflation and adding 2%. As an example, if the CPI was 2.5% in September of the previous year: 2.5% (CPI) + 2% = 4.5%. 1.75% (previous year’s interest rate) x 4.5% = 0.08. 1.75% + 0.08 = 1.83% The interest rate for year 7 would be 1.83%.

Have a read of our self-build money saving guide to find out more about the costs involved in self-build projects and where you can make savings.

Which tradespeople are needed to build a house?

Checkatrade members at work

A whole host of tradespeople are needed for a house build!

  • Builders
  • Electricians
  • Plumbers
  • Gas engineers
  • Roofer
  • Architect
  • Surveyor
  • Plasterer
  • Bricklayer
  • Painter and decorators
  • Just about every trades professional under the sun

Depending on the size of your building contractor, however, they may have recommendations on who you should work with for your self-build.

Or easily browse through Checkatrade and get a list of tradespeople near you who are checked by us, reviewed by your neighbours, and best of all, guaranteed by us!

See the tradespeople we've checked and recommend for your job

FAQs

How do I apply for the Help to Build scheme?

Secure a self-build mortgage through an approved and registered lender. Then apply for Help to Build through Homes England.

How much deposit do I need for a self-build?

This will depend on your mortgage lender. Deposits can range from 5% to 50% of the property value with average deposits around 25%.

Can you get help to buy on self-build?

No. Because of the complexities of self-build projects, help to buy funding is not suitable.

Is it cheaper to build a house than to buy one?

Building your own house is usually more expensive than buying a home on the property market. This is because with self-build, you get to design and customise your home to suit your requirements.

Do you pay stamp duty on a self-build?

No. Self-build properties are exempt from VAT as long as they are used as your home once complete.

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