From Mr Tom Brown.
Sir, Your feature on self-build housing (“Funding support sought for self-build homes as big developers fall behind”, August 18) is timely considering the very high cost of housing in the UK and the consequent negative effects on the economy as a whole. But in shifting the blame largely on to beleaguered UK banks for failing to lend to self-builders, you skate over two inconvenient truths, which separate the German self-build market – by far the largest in Europe – from the UK.
First, in order to form eligible collateral for a Pfandbrief (covered bond) the maximum loan-to-value for a mortgage loan in Germany is 60 per cent. Consequently, the typical self-build mortgage borrower is middle aged, has saved long and hard to raise the equity needed effectively to buy the land, possibly through a Bausparkasse (building savings bank) and buys and builds once in his or her lifetime, in a location where the owner “settles down”. Not infrequently, such houses only ever have one owner-occupier, because the next owner is more than likely to demolish it and build again. Self-build is not how the young get their “foot on the housing ladder” (an Anglo-Saxon concept), because young people generally live in the well-regulated private rented sector, while those who wish ultimately to own can save to buy or build a house, probably to last until retirement.
Second, much self-build, especially in the lush suburbs of Germany’s great cities, is not on undeveloped land, which is as jealously guarded as an environmental amenity as the greenbelt of British cities, but involves an existing house being demolished and replaced with one to the new owner’s taste. Unless the house is under an individual conservation order, this generally requires no planning permission, merely observance of the building rules (for example as to height and percentage of plot occupied by building) for that area. English planning law and, above all, its application by council planning officers and committees, living under the stifling tyranny of English resident association taste, which regards anything not pastiche-Victorian or fake-Georgian as an attack on civilised values, make this “live and let live” attitude to other people’s taste in housing well nigh impossible to imagine being transplanted to Surbiton, Solihull or Sale.
Any measures that the government can devise to promote self-build are to be warmly welcomed, but working out the deep crisis of housing affordability will probably require far more controversial measures, including rent regulation and possibly restrictions on foreign ownership.
Tom Brown, Senior Credit Executive, Norddeutsche Landesbank, London EC2, UK