New Build Grants and Funds

Why building a new home can make sense

It can be challenging to find an existing property that fulfills all your requirements. Most buyers compromise on something, whether that is location, size, layout or price.

Building your own home offers another option. Self-build and custom-build projects let you design a property around your requirements. You choose the plot, the floor plan, the materials and the heating systems. The result is a home built to suit you rather than a previous owner.

There can be cost advantages too. The combined expense of buying land and constructing a home is sometimes lower than buying a similar finished property in the same area. Industry figures suggest self-builders may save 20 to 30 per cent compared to market value, though this varies widely depending on location, specification and how much work you take on yourself. These savings are not guaranteed, and some projects end up costing more than anticipated once delays, design changes and unexpected issues are factored in.

Building a new home allows the opportunity to incorporate energy-efficient features, which can be more cost-effective during construction than retrofitting. Adding insulation, heat pumps or solar panels at the build stage typically costs less and performs better than adding them to an existing structure.

However, building does come with significant drawbacks. The process demands considerable time and emotional energy. You may spend months or years managing decisions, dealing with setbacks and living with uncertainty. The upfront costs can be higher than buying an existing property, even if the final value exceeds what you spend. There is also the environmental question of whether building on a new plot is preferable to renovating an existing home, which reuses materials and infrastructure already in place.

Government schemes that may help

Several programmes exist to support people building their own homes, though availability and terms change over time. Check GOV.UK for current details before making plans based on any scheme, as the information below may have changed since publication.

• Help to Build Equity Loan: This scheme offers equity loans for self-build and custom-build projects in England. The government lends a percentage of the estimated land and build costs, which you repay when you sell the home or at the end of the loan term. Eligibility rules and regional loan limits apply. Verify the scheme is still accepting applications before relying on it.
• Right to Build: Local authorities in England must keep a register of people interested in self-build or custom-build projects. Councils are then required to grant enough planning permissions to meet demand on their registers. Signing up does not guarantee you a plot, but it does signal local interest and may influence planning decisions.
• Self-build exemption from Community Infrastructure Levy: Self-builders can apply for relief from the Community Infrastructure Levy, a charge some councils apply to new developments. You must meet certain conditions, including living in the property as your main home for a set period. Check current requirements with your local authority, as the specific terms may have been updated.

Scotland, Wales and Northern Ireland operate their own housing programmes with different eligibility criteria and support levels. Scotland has promoted self-build through various rural housing initiatives, while Wales has focused on community-led schemes. Contact your local authority or check the relevant government website for schemes in your area.

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Funding options

Standard mortgages are not designed for construction projects. Most lenders will not release funds for a property that does not yet exist. Self-build mortgages work differently.

With a self-build mortgage, the lender releases money in stages as the build progresses. These stages typically align with key milestones: buying the land, laying foundations, completing the structure, and finishing the interior. Some lenders release funds before each stage begins, while others pay only after the work is complete and inspected.

Interest rates on self-build mortgages have historically been higher than standard residential mortgages, though rates across all mortgage products fluctuate with market conditions. You will usually need a larger deposit too, commonly 25 per cent or more of the total project cost. Lenders assess both your financial situation and the viability of your build plans.

Custom-build projects, where a developer handles most of the construction while you make design choices, may qualify for more conventional mortgage products. This depends on the arrangement and the lender.

Some local authorities offer discounted plots or funding support for self-builders, particularly for affordable housing or community-led projects. Community Land Trusts and housing co-operatives occasionally provide routes to self-build for people who might not otherwise afford it.

Practical points to consider

Building a home involves more complexity than buying one. You will need to manage or oversee planning applications, building regulations, contractors, materials and budgets. Costs can increase unexpectedly, and delays are common. The disruption to your daily life can be substantial, particularly if you are managing the project while working and caring for a family.

Before committing, it helps to:

• Research plots carefully, including access, utilities and any planning restrictions
• Get realistic quotes from builders and allow a contingency of at least 10 to 15 per cent
• Understand what insurance you need during construction
• Check whether VAT reclaim applies to your project, as self-builders can often reclaim VAT on building materials

The National Custom and Self Build Association provides guidance and resources for people considering this route. Your local authority planning department can explain what permissions you need for a specific site.

Building your own home is not straightforward, but for those prepared to put in the work, it remains one of the few ways to get exactly what you want.