Greater awareness of custom-build is critical to unlocking its untapped demand, according to new research from Saffron for Intermediaries
Saffron for Intermediaries has found that there is high interest and demand for custom-build among younger generations, with 64% of 18 – 24-year-olds either considering or have considered it, compared to only 21% of those over 55.
The building society surveyed more than 2,000 consumers from the UK, half of which had considered or would consider custom-building their own home. The study explored their knowledge of custom-build, what they considered to be the benefits and drawbacks, and the perceived barriers to custom-building properties.
Interest from younger generations provides an untapped opportunity for lenders
Further findings highlight that 35% of those aged between 18 and 24 said they were aware of the Right to Build register, compared to only 17% of those over the age of 55.
The Right to Build register is a way for local authorities to keep track of individuals and groups interested in self-building or custom-building in their area. Under the Self- and Custom-Build Act 2015, local authorities must ensure there is adequate land provision for anyone looking to build their own home, as per the register.
The study also highlighted that 42% of respondents between the ages of 18 and 24 were able to pick out the correct definition of custom-build, compared to 34% of those over 55.
First-time buyers have faced an increasingly challenging market in recent years. The growing awareness of custom-build may signify that younger people are exploring alternative routes to home ownership – something which lenders and brokers can tap into.
Lack of awareness holding back custom-build
More broadly, however, a lack of awareness around custom-build is holding back the market, and brokers, lenders and customers are missing out as a result.
In fact, only 39% of respondents were able to accurately pick out the description of custom-build, showing that many prospective buyers are making one of the most significant financial decisions of their lives without being fully informed about all of the options available to them.
Of those who are considering or have considered custom-building their own home, 34% didn’t know what the Right to Build Register was, and only 28% had actually signed up. This is not only an issue of awareness but is also the result of barriers and constraints to joining the registers imposed by local authorities. The consequence is that the registers don’t accurately reflect demand so the Government and industry cannot respond appropriately.
Addressing misconceptions can help unlock demand
There were also a number of misconceptions from respondents about custom-build. For example, respondents tended to think custom-build projects would be more expensive than they actually are, estimating that the average two-bedroom, custom-build house would cost £248,000. In reality, these types of projects could cost as little as £190,000*, depending on the design and the quality of materials used.
24% of respondents also thought that taking on a custom-build project would be too much hassle, despite the fact that for custom-build, buyers don’t need to manage the project themselves and can be involved in it as little or as much as they like depending on the project type they choose.
With 28% of respondents saying they would be more attracted to custom-build if they had more information on how it works, correcting these misconceptions could unlock greater demand for custom-build, and support the Government’s housebuilding targets.
Tony Hall, Head of Business Development at Saffron for Intermediaries and member of the board of the National Association for Self- and Custom-Build, comments: “Custom-build housing offers a significant opportunity to help meet the Government's housebuilding objectives and provide prospective homeowners with tailored, affordable options. However, our study shows that awareness and understanding of custom-build remains low, with many consumers unsure about the process and benefits.
“That being said, it is really encouraging to see growing interest from younger generations, who are exploring alternative routes to homeownership in today's challenging market. For lenders and brokers to harness this potential demand, raising awareness is key. We must bridge the knowledge gap through targeted information and guidance, helping consumers understand how custom-build can meet their needs and fit their lifestyles.
“For brokers and lenders, this presents a valuable opportunity to expand their business by supporting customers in achieving their homeowning dreams through custom-build projects."
Peter Johns, Chief Executive at National Custom & Self Build Association (NaCSBA), comments: “NaCSBA, has campaigned tirelessly for the custom-build sector, which offers consumers complete control over the design of the home they choose to buy while supporting the UK’s housebuilding agenda.
"Saffron’s survey has shown that appetite for custom-build is certainly there and it is particularly encouraging to see that it appeals to a younger demographic. We are delighted to have Saffron as a Gold Partner member of NaCSBA and look forward to continuing to work with them and the rest of our members to help make custom and self-build a mainstream choice in the UK housing market.”