A Freedom of Information request by EYE to HMRC has revealed the astonishing shrinkage of the self-build market and highlights the uphill struggle of spin docors to make it meaningful in the context of the 1m new homes a year promised by the main parties.
We asked the question because of attempts to talk the market up – particularly to the Government which has in the last couple of years made reference to the potential of self-build as a contributor to solving the housing crisis.
However, the reality is that the self-build sector has collapsed.
Always small, it has roughly halved in the last 20 years and is now so tiny as to look discountable in terms of the 1m homes a year now promised by the main parties.
The Government appears, however, to be unaware of its own figures.
Individual self-builders and people converting non-residential properties into homes can reclaim VAT on materials.
There are two HMRC schemes enabling them to use this – one for builders of new homes, Notice 431NB, and the other for converters, Notice 431C.
The schemes are available not just for people physically building their homes, but for those who have their homes built for them and who might buy only some – and in some cases, just a very few – of the materials, for example paving slabs.
In the nineties, there were between 10,000 and 14,000 self-builders and converters reclaiming their VAT each year.
However, in each of the past two years there have been around only 6,500 reclaims.
In the financial year 2015/16, there were 5,278 self-builders reclaiming VAT, and a total of 1,086 converters – a combined total of 6,364.
In the financial year 2016/17, there were 5,477 self-builders and 1,068 converters reclaiming VAT – a total of 6,545.
These totals compare with claims that the self-build and custom build sector is growing at 6.25% a year, and that there will be 16,500 completions by 2020. The claims were made in a report which itself cost £750 plus VAT.
If correct, then these forecasts would be reliant on sharp growth in the custom-build sector – where buyers have some input, which can be very limited, into the design. Custom-build is also un-trackable.
The totals obtained by our FoI request also compare with claims that the sector has a strategic role to contribute to the Government’s house building targets.
Last week, housing minister Alok Sharma opened the UK’s first ‘plot shop’ in Bicester, Oxfordshire. It says it will sell up to 1,900 plots of land based on demand for self-build and custom-build.
Sharma said: “We need to get creative with how we build our housing in this country, to deliver more of the right homes in the places people want to live.
“With the opening of the UK’s first ‘plot shop’, the journey to building your own home can now start on the high street.
“As confirmed in our housing white paper, we are committed to doubling the number of custom and self-build homes by 2020 – so that anyone who wishes to design their dream house can do so.
“Through diversifying the housing market in this way, we can give people greater choice over the homes they live in – whether that’s buying on the open market or by commissioning and building their dream home.”