The Highlands Small Communities Housing Trust is very excited to announce the launch of the Highland Self Build Loan Fund. It is a new Scottish Government fund, to be administered by HSCHT.
It has been recognised that there was a gap in the lending market, to provide funding for self builders, prior to mortgage facilities being available. This is where the Highland Self Build Loan Fund aims to help. The fund allows HSCHT acting as agent to the Scottish Government to provide a revolving fund to self builders throughout the Highlands.
The Highlands were chosen by the Scottish Government for this two year pilot scheme, after it was noted that the area has a history of self and custom builds. Keeping the allocation of the fund specifically to the Highland region will assist with monitoring and evaluation of the Highland Self Build Loan Fund, and give an indication to the Scottish Government of how successful the pilot is.
Over recent years, it has become increasingly obvious that there is a gap in the market regarding the funding of self build projects. That is demonstrated by the fact there has been a massive reduction in build projects in general throughout the region since 2007. According to statistics from the Highland Council’s planning department, in 2007/08 there were 1845 completed house builds. In 2012/13 this had dropped to only 833. This number has levelled off the past couple of years, with 984 new builds being constructed in 2014, and 974 in 2015. It is widely thought that a large majority of this decrease is down to the decline of self build and custom build projects in the Highlands.
HSCHT believes the main reason for the huge reduction in self build projects throughout the region is the difficulty now being encountered by applicants in securing mortgage finance to cover the period up and until a property is complete. As a result, mainstream “high street” mortgage is currently difficult to secure, if not impossible.
The Highland Self Build Loan Fund aims to generate growth in this “self build” sector again, and provide financial assistance to individuals and families who have in recent years been unable to progress with their self build projects.
Over the last few years the Highlands Small Communities Housing Trust has had many communities, community groups and individuals contact them seeking assistance. HSCHT has been restricted in its ability to help them due to the fact that the financial market is not providing the required lending in the Highlands of Scotland. For this reason we are very excited to finally be able to help people around the Highlands, who have long desired to build their own homes.
HSCHT will keeping a database of all the people expressing interest in the fund, in hope that this will prove to lenders that there is a high demand, and that it is indeed possible to finance these type of projects.
This year’s Rural Housing Scotland Conference, was held at Birnam Arts & Conference Centre on Friday the 26th of February 2016. The conference examined affordable housing in rural Scotland, with the main speaker – Margaret Burgess MSP, Minister for Housing & Welfare, discussing the new Rural Housing Fund, the Scottish Government’s proposals for affordable housing, the impact on the Land Reform Bill on rural housing opportunities, and community empowerment. On top of this, this is where Margaret Burgess also announced the Highland Self Build Loan Fund.
HOW IT WORKS
£4 million is available in total to provide to individuals and families throughout the Highlands over the next couple of years. This is a revolving fund, so as some projects are completed and the loan provided to them is paid back, we will then be able to use this finance to assist another applicant. Through doing this, we hope to help as many people as possible to build their own homes.
The funding will be available from the start of the new financial year (April 2016) and we will be able to confirm loan agreements over the 24 months that follow.
The analysis of the pilot will be used to inform future policy for self build support in Scotland, and to provide evidence of demand to “high street” lenders.
The new fund will allow applicants to borrow up to £150,000, to help them reach build completion. The loan is then repaid when the applicant is able to access a traditional mortgage.
The HSBLF can help a wide range of people who are considering a self build project for their primary residence. Those who own or part-own a home can apply although they need to sell their interest in that property.
In addition, the HSBLF applicants will be prioritised in the following order:
1) Applicants with all necessary titles, permissions, warrants and other documentation requested during the application process.
2) Applicants with shorter build programmes. This is to allow us to provide more funding for a greater number of projects – allocating funding to a larger number of applicants between April 2016 and April 2018.
3) Applicants with greater housing need.
The agent (HSCHT) will assess the project costs and compare this with the applicant’s contribution. If there is a shortfall in cash flow to reach completion stage (where mortgage funds become available), this will be the basis of how the HSBLF amount is calculated.
The duration of the fund being available to each applicant will depend on their build schedule. This will be decided before a formal offer is made. The loan offered to the applicant can be drawn down over the course of the project build – at stages previously agreed during the application stage.
While the launch of the Highland Self Build loan Fund is great news to those who have been struggle to achieve financial assistance to build their own homes over recent years. It also brings a number of wider benefits.
The Highland Self Build Loan Fund will allow development to occur across the Highlands, including in smaller rural communities, where housing is sparse. This will help meet the housing needs of the community, and will therefore prevent outward migration, especially of young people unable to access secure and affordable housing in their community. The supply of affordable housing to smaller communities is the basis of a massive amount of the work The Highlands Small Communities Housing trust undertakes. A large benefit in the provision of new housing to rural areas, is that is allows families and individuals with desirable skills to stay within the area.
The Highland Self Build Loan Fund also provides opportunities for local contractors who rely heavily on self build in rural areas. Many self and custom builds make use of local tradesmen, reducing their travel, costs and carbon emissions.
Individuals and families, may have found themselves spending years trying to obtain suitable finance to help them build their own homes, many of which may have spent a considerable amount of time in unsuitable living conditions. This new fund should help these people finally realise their dream, and allow them to move into more comfortable surroundings once they have eventually completed their build.
CEO of HSCHT, Ronnie MacRae has said:
“We are excited to see the launch of The Scottish Government’s Highland Self Build Loan Fund and we are delighted to be administering it. We anticipate that it could assist many Highland households to build their own homes. We welcome the new initiatives provided by The Scottish Government and it is an exciting time for housing options in the North.”
If you are interested in hearing more about the Highland Self Build Loan please contact us on:
01463 233548, or at
A brochure and application pack can also be downloaded from HERE.
Follow us on Twitter - @SelfBuildFund.
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