Exploring The Help to Build Development Opportunity
Property investment is undoubtedly booming – but could there be another lucrative opportunity on the horizon for developers in West Sussex? Here we explore the new Help to Build funding initiative (worth no less than £150 million) and what the government calls the ‘self-build revolution’.
This project aims to drive revenue through the construction sector and make it more affordable to build new homes – great news for smaller developers or investors considering building their dream property. But, with a parallel £75 million Brownfield Land Release Fund, could these tandem programmes create a unique investment landscape?
Let’s work through the factors to see what new-build schemes might mean for the future of the West Sussex housing sector.
Financing Construction Through Help to Build
We’ll start by looking at Help to Build – an offshoot of the pre-existing Help to Buy scheme.
The great news is that Help to Build isn’t about larger construction projects by the big-name UK house-builders. It combines aspirations to increase the number of new homes, make it easier for people to construct their properties, and improve economic activity post-pandemic.
Here’s a quick recap of what the scheme offers:
- Funding support for new builds, either from scratch or built to order.
- Eligible projects range from individual constructions to small building developments.
- The programme will provide an equity loan (a deposit) to reduce development or self-build mortgage costs.
With an equity loan, developers or self-builders can free up more capital to use for the construction project without needing to raise a substantial deposit. The exact details are pending, but it’s likely the available support will echo other schemes. That would mean borrowing up to 20% of the project value on a zero-interest basis for five years.
The scheme opens for applications in the late summer, and interested investors can search for vacant land plots via the Self-Build Portal.
West Sussex as a Unique Development Area
Our guide, Why West Sussex is a Property Hotspot, identifies some of the main reasons our idyllic county remains one of the most sought-after locations in the UK. With average house prices increasing county-wide over the last year and demand continuing to grow, shortages of quality homes will remain a factor driving up property values.
Therefore, developers or investors have a superb chance of selling new-builds quickly, for high market values, given the calls for more exceptional homes in this part of the country. Leveraging the lower costs associated with Help to Build could make for a lucrative return on investment, given the seller’s market we’re currently experiencing!
Another option would be to utilise Help to Build to reduce construction costs on a bespoke development and thus create an expanded rental property portfolio, commanding premium rental income on quality new homes.
We’ll talk about brownfield sites in a second, but it’s also worth noting that:
- Buyer requirements for houses remain the strongest in the sector – with homebuyers looking for larger properties and outdoor space.
- Around 80% of West Sussex houses for sale last month were already under offer or subject to contract.
- Enquiries in key areas, such as Bosham, Itchenor and West Wittering, have increased by 86% and 89%.
Therefore, it’s clear to see that building new properties for sale in West Sussex is a wise investment, whether to sell a new-build for a comfortable profit or retain new rental assets for the long term.
Sussex Brownfield Development Prospects
Now, it’s worth pointing out that applications for the Brownfield Land Release Fund (BLRF) closed on 2nd June – but that this indicates a broader appetite for utilising empty plots in need of new investment.
It’s an exciting investment scenario when considered alongside the Help to Build initiative and the increasing interest in West Sussex properties. The Land Release Fund has been around since 2017 but is now hitting the spotlight by ramping up calls for surplus land to be made available for development.
In short, the government aims to build 300,000 new properties a year – with a mixture of larger residential developments, individual custom or self-build projects, and local authority managed schemes.
West Sussex, as well as maintaining vast volumes of buyer interest, is also a prime region to utilise this drive to make better use of empty brownfield plots.
- As of October 2020, the volume of brownfield sites in Sussex was the size of Littlehampton.
- Around 1,007 acres of abandoned land exists in the region – enough to build 23,000 new homes.
- If investors were to snap up those vacant sites and create residential homes, the resulting increase in properties would satisfy the Local Plan requirements in Sussex for at least two years.
Brownfield sites are considered those that have been previously developed and have since fallen into disrepair. That could be, for example, a closed business, an empty factory, or an ex-industrial development that cannot be returned to green space due to soil contaminants.
Developing brownfield land is a crucial target for national and local governments, not solely because it repurposes eyesores but because it meets environmental targets to safeguard green spaces. In West Sussex, that means preventing any construction on our treasured South Downs, favouring sites prime for redevelopment.
The New West Sussex Investment Property Opportunity
So, what does all this information mean?
It tells us that if investors were eligible for a Help to Build equity loan and could also tap into demand for developments on brownfield sites, it may well mean a desirable return on investment – with eco-friendly credentials to boot. The brownfield land project isn’t a one-off, either.
While this first round of applications may have closed, a substantial £25 million (one-third of the total) has been ring fenced for self-builds and custom-builds – so it’s not just available to local authorities.
Running until March 2024, the BLRF is all about unlocking potential housing stock, speeding up access to these sites, and supporting investments to create high-quality homes built with modern construction methods. We predict that we will see tremendous growth in local developments in the next three years and, hopefully, a dramatic drop in the volume of brownfield sites that are currently prime for West Sussex redevelopments.
For more information about any of the initiatives mentioned here or assistance in identifying potential development opportunities throughout West Sussex, please get in touch with the Tod Anstee team