Tag: volume house builders

HPH260 : What’s the difference between a self build and a speculative development? – with Mark Stevenson
Managing Director of Potton Homes, Mark Stevenson, looks at how self build, custom build and speculative development differ.

Interview with Mark Stevenson

Mark Stevenson has spent most of his career working for house builders and developers, including in the role of Construction Director for ten of those years. For the last seven years he has been the Managing Director of Potton Homes, a company that specialises in making the process of self building homes as simple as possible.

Potton Homes Centre

Self build is about self-commissioning

While this isn’t the case in all projects, for the most part self build isn’t about physically building the house yourself, but about getting in the right team of people to build it for you.

Even the biggest risks can be managed

Mark cites obtaining planning permission as the being the biggest risk to a self-builder. He wouldn’t advocate buying a plot of land without a permission on it, but instead suggests identifying a piece of land, securing the rights to buy it with an option and then getting planning permission. Once that has been secured the sale can be completed.

“So from a risk point of view in self build, it’s all manageable. It’s about the choices you make in how to limit your exposure to those risks, and make sure you’ve got a way to get out of a problem without it becoming too expensive too quickly. So I don’t think self building is actually that risky, if managed properly and managed professionally.”

Custom build is a government re-brand of self build

Their intention was to encourage potential self builders who didn’t have the confidence, or want the risk, of buying a plot of land, seeking planning permission or organising the build themselves. They wanted to explain to the market that planning permissions could be put in place on plots beforehand, builders are on hand to build them, and they just need the individual to customise the design to suit their requirements.

Schemes like Graven Hill offer sites for both self build or custom build

A Potton self build project on the edge of a developer estate near Peterborough

Mark agrees that there are plenty of blurred lines between the two, with different offerings between custom build companies. To some, such as Potton, it means helping the owner move their plot forward and asking what house they would like to build there. Another company might offer a plot of land with a selection of five houses to choose from.

Potton show homes try to provoke a response – be it positive or negative

Potton provide a diverse mix of show homes at their centre with the intention that people walking round can immediately react to what they like and dislike about them. Provoking these responses helps mesh the ideas and concepts together of what would work for that individual.

“By walking around the physical property you can start to understand how you could commission something that’s all about you and your family, and deliver something that functions in the way that you want to behave and live together as a family. And that’s just about spaces and how things work.”

The centre is about being able to develop your brief with the subjective attributes that you perhaps hadn’t thought of before, but have been triggered as a response to being in those spaces.

A speculative development can be one house or many

A speculative developer tries to predict what someone would want to buy at the end of the entire process. They make the choices about what a purchaser may want, how it should look and how it should perform. In doing so they are trying to maximise the value of that asset in the hope they can sell it and make a profit. There is a fair amount of risk involved as they are speculating on the profit, which is only realisable at the point of sale.

An individual buying a single plot with the intention of building a house to hopefully sell for a profit, is a speculative developer in much the same way as volume house builders, but without the economies of scale, the bigger margins and bigger profits to make.

Mark estimates that a developer would be looking to make a profit of around 15-20%. Individuals might be happy to take a bit less as they don’t have the overheads. The volume builders may take decisions in the development process to maximise their profit in order to sustain their business, and push harder to cover their large overheads.

Take emotion out of the process

This is Mark’s first piece of advice to anyone wanting to undertake a speculative development. As soon as you start becoming emotional you might start incorporating things you yourself like, but others may not and therefore perhaps not add value to the house. It’s about keeping a keen eye on value and offering products, contents and functionality of the house that someone will give you the money back for.

“Development is about a systematic approach to making the fundamental choices that maximise value and reduces your risk. And in doing that and controlling your costs, you make sure the return is as large as possible.”

Market test to see what demand there is for what you’re offering

With Ben’s intention to build his development to the Passivhaus standard, Mark suggests he market test to see what kind of demand there might be, and even if there is a demand, whether it would be likely to achieve a higher price. With the mainstream market being conditioned to accept that a house might not have great performance, sales are more commonly driven by factors of location and functionality.

With far fewer people in the market looking for a Passivhaus, Mark questions the likelihood of finding one of those who is looking for that product, in that area, with the architectural design that has been chosen for them. With so many variables it may mean struggling to find a buyer for what has been created.

Mark would advise being careful how it was marketed, highlighting the low energy bills, rather than emphasising it being a Passivhaus, in order to appeal to more of the house-buying community who may not know what the term means.

Self build is driven from a personal viewpoint, speculative development is a business proposition

Mark describes self builds as being about individuality and making sure you deliver on what is right for you and your family. You’ll invest and spend whatever you feel is appropriate.

A speculative development on the other hand is a business proposition. You’re trying to appeal to certain types of individuals who might offer that bit more money to maximise profits. It becomes a set of business decisions based on whether you will get your money back and if there is a profit to be had.

Developers appeal to the mass market, instead of pushing boundaries

Mark says while it’s great to be individual, providing a safer, more standardised offering will produce more customers willing to buy your product, and ultimately raise prices and profit. And this is why there is a proliferation of the four bedroom executive house with a central front door and four windows, because someone somewhere has worked out this is the formula for building at the least cost to maximum return.

For a lot of people, what’s the alternative?

For many people with busy lives, who don’t have the time to shop for a second-hand house and spend several months doing it up, buying a developer home is about convenience. The only alternative is the nice new site just down the road, with the extra bedroom and space they need, offering a good price, part-exchange and legal fees paid. And, Mark says, that’s why we’ve ended up with a sterile development environment.

Custom build can be a middle ground

Mark sees custom build succeeding where it incorporates the individuality of a self build, and takes away the risk of speculating what someone might want to buy by asking them in advance and negotiating a price that both parties are happy with.

Tips for tackling a small scale development
- Anything you do well is normally driven by passion, and this is no exception. You need to really want to do this to do it well, and passion will carry you through the weight of the work
- Be impersonal and keep emotion out of it
- Do market research to understand what people want and how you can incorporate those things – perhaps even contacting local estate agents to find out what houses people want to buy
“But just don’t go off on a leap of faith that your beliefs are the ones that everyone else should have, because it’s not necessarily the dream that everybody shares that you might have.”

Find out more

Visit the website of Potton Homes

Follow Potton Homes on Twitter

Transcript

Download a transcript of the interview with Mark Stevenson.

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August 15, 2019
HPH149 : Can airtightness tests on developer homes be trusted? – with Paul Buckingham of Sustainable Lifestyles
Paul Buckingham explains his frustrations about building standards in volume built houses.

Interview with Paul Buckingham

In Episode 99 we spoke to Luke Mahon about what it had been like living in his new, developer built, home. In this episode we are turning attention to the insights of someone who has worked within the industry and has been frustrated by the practices he has routinely seen.

Paul Buckingham is a trained electrician but his interest in the energy efficiency of buildings led him to complete a Masters degree in Architecture: Advanced Environmental and Energy Studies at the Centre for Alternative Technology (CAT). Over the last 4 or 5 years his work has predominantly been in airtightness testing, and estimates in that time he must have carried out tests on over 2000 properties, of which he says none of them were properly airtight. Until recently much of the work he did was on volume built houses and he shares some of his experiences of that time.

Paul now runs an independent consultancy, providing advice on achieving energy efficiency.

The airtightness testing is about making the house pass the test, not about making it energy efficient

Paul claims that his experience of testing was about quantity and not quality, getting as many houses to pass the test as possible.

“All you’re doing is effectively bodging to get it through an air test…. And it doesn’t matter how good or how bad the building is, it will pass eventually.”

He uses the example of dry lining which should be solid dab and fully sealed around the tops, bottoms, electrical outlets etc, but invariably the builders are not using anywhere near enough plaster. After the boards have been put up on the walls this can be spotted with a thermal camera to see where the dots and dabs are.

Paul tells of a house he visited where the building failed the airtightness test because of a lack of mastic around the skirtings. He says the builders then put in the mastic, only for the carpet fitters to cut it out again. After it was then replaced by the builders and subsequently passed the airtightness test, Paul noticed them once again cutting it out as he was preparing to leave.

“So they’ll go round, they’ll mastic it purely to get it through an air test but it does look a bit messy because they go in there, they literally just throw this stuff on there just to seal the skirtings up so they can get an air test pass on it. And once we’ve finished they come in and cut it all out again. It happens on pretty much every house I’ve ever been to.”

Cold air flowing behind the dry lining of a new house where it has not been sealed to specification.

Wind blowing through the eaves and across the ceiling of a brand new loft conversion.

Some builders were prepared to take advice onboard

Paul says there was a often a shortfall in knowledge on site about what airtightness is and how to make a house airtight, and it was his aim to advise people how to improve on this, rather than just get the buildings to pass the test. He found some site managers and builders more receptive than others to his suggestions and they were prepared to work with him to get the houses built right, rather than patching them up at the end.

The tight schedules mean quality is often not a consideration

On a large housing development the builders are given such tight schedules that Paul claims the builders themselves say they’re just throwing the houses up in order to meet deadlines and targets.

“And when the guys that are building them turn round and say I wouldn’t buy one, then there’s something seriously wrong somewhere.”

Loft space of a new house showing insulation that has fallen out because it wasn’t installed to manufacturer’s specification.

Absence of loft insulation on a new build house.

Paul was eventually fired from his recent airtightness testing job. He says his employers weren’t happy that he was spending time trying to get the message across and get the builders to change their ways, when he should have been keeping the customers (the volume house builders) happy by helping them to just get a pass on the buildings. Things came to a head after he wrote a report where he had used thermography to show missing insulation, air leakage around windows and air blowing in behind the plaster board.

“But I think had they not sacked me I would have quit anyway because I got to the point where I just couldn’t do it anymore. I just felt like a total fraud.”

Use an independent surveyor or airtightness tester if you’re planning to buy one of these homes

Paul points out that when it comes to the airtightness test, “the trouble is the builder pays for it so the builders effectively own the compliance companies.” He suggests that if it was instead carried out by an independent tester or surveyor, and paid for by the potential purchaser, you could be sure of a more impartial result. He says this might be a step in the right direction of putting pressure on the builders to improve standards and practices. He would also like to see a tightening up of legislation, where things adhere to the Building Regulations to the letter, not just an interpretation of them which is what he currently sees.

“I know how we can make energy efficient houses, it’s just that none of the main builders seem to be doing it. They just seem to be throwing up boxes and selling them. If I could work with these builders and advise them on how they can make them properly energy efficient then yes I think I’d be quite happy with that but at the moment I’m not seeing any of that!”

Find out more

Visit the Sustainable Lifestyles website

Follow Paul on Twitter

Transcript

Download a transcript of the interview with Paul Buckingham.

The Big Green Home Show – National Self Build and Renovation Centre

A reminder that Ben will be speaking at The Big Green Home Show at the National Self Build and Renovation Centre on 8th and 9th October. He’ll be talking on the topic of what it’s like to be a self builder. He’ll be drawing on his self build experiences so far, some of the challenges that you might face, and also offering some of the tips that he has picked up from visiting a number of Passivhaus self builds across the UK.

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October 5, 2016
HPH019 : How Does Self Build in the UK Compare to Germany? – with Mark Brinkley, Author of The Housebuilder’s Bible
Mark Brinkley considers why the UK has the smallest proportion of self build across Europe and what changes might need to occur if we wanted to adjust the balance. Mark shares why Germany’s system is more likely to lead to higher standards and communities that embrace development.

Interview with Mark Brinkley

Mark has been involved in construction for over 30 years, initially as a site carpenter and then doing his own developments of barns and new builds. In the 90s he decided to write about the process and produced The Housebuilder’s Bible, which has been a popular resource for people wanting to find out about the practicalities of building a house. It’s revised every two years and is approaching its 10th edition.

Fashions and Regulations Change The Most Through The Years

Mark includes prices in his book and says that, funnily enough, they don’t vary that much – the things that really change are people’s tastes and also the regulations. Incrementally there are more codes, and changes to building regulations and planning. He concludes that it seems to get more complicated!

Much More Choice Now

In the 80s and 90s there were straightforward choices, such as choosing between timber frame or brick and block, but now there are many options. Mark talks about using Boulton and Paul windows in every house in the early days, whereas now there’s a huge selection from which to choose. Not only are products available from different countries, but they perform to different standards.

Self Builders Are Likely to Make Mistakes

Mark praises self builders for their enthusiasm and ability to learn, often picking up things that people in the trade close their minds to. However, this can lead to taking on ideas that look good on paper but turn out to be very difficult in practice.

Building Your House is Like Choosing a Holiday Abroad!

Mark talks about compromises and having to jump one way. It’s like going to Italy for a week! If you take in Venice and Rome, it means you miss Sienna and Bologna and Naples, and all the other good things. Perhaps at the end of the holiday you’ll end up thinking that you’ve just scraped the surface.

The People You Meet Have a Major Influence on The House You Build

Mark suggests that building a house is a people business. The people with whom you get on are generally those who guide you. Whether that is actually a good approach or not is impossible to know. Very often connections are made at shows or you meet people or friends that have done it. This subtle influence can often have a major impact on the project.

Self Build Accounts For a Tiny Amount of UK Housing

Over the last few years Mark has been working with Ted Stevens and NaSBA to help promote self build in the UK. While 10-15% of UK houses are self built, in many European countries that figure is around 50%. In fact, this approach is so common that they don’t even refer to it as being self build, it’s just how they build houses!

Huge Uplift in Value of Agricultural Land in UK, if Marked for Development

In the UK, the system sees the land owner and their agent (usually a volume house builder) promote schemes to the council. The council arbitrates, giving a yes or no. If it goes ahead then they try to claw back as much as they can in tax from the deals. Subsequently there is a huge uplift between the value of agricultural land, which is worth a few thousand pounds an acre, and the land now for house building, which could be worth a million pounds an acre.

UK Farmer’s Windfall Not Popular with Villagers

Any British farmer that can sell off a field as a building plot effectively wins the lottery! The rest of the village feels cut off from this process and also perceive the farmer as being greedy. This is where the acronym NIMBY (Not In My Back Yard) comes into play. What happens in Germany is completely different.

German Councils Buy Land From Farmers

In Germany, the councils almost have a system of compulsory purchase. Once land is identified, the farmer gets a small premium for losing it and then the council divides it up into serviced plots. These are then sold to local people as a priority.

German Custom Builders Commission Local Companies for Their Builds

The owner of each serviced plot will visit a show house village to choose exactly what he or she wants. This creates competition between the 150 (often family-run) custom home builders, who each only deliver a few hundred homes a year. This competition also keeps building standards high. So, there’s a lot more choice for the person who wants to build: from choosing the plot to deciding exactly what goes on it.

British Council’s Used to Be More Involved

Mark gives an example of a Cambridge development from the 1930s where the council actually laid out the street and then self builders and small local developers took it from there. Somehow through the years the British system has changed. The council’s have now become box tickers and tax collectors. Their interest is in the number of units, the road infrastructure and the schools, etc.

Sustainability is a Benefit of High Density Housing

While the UK’s new housing has a reputation for being the smallest in Europe, with little or no gardens, it is a more sustainable situation! Towns don’t tend to sprawl as much, brown field sites are developed and people can walk to local amenities. But does the German’s looser, more organic approach actually create better places to live?

Low Density Housing Can be More Biodiverse

There’s a lot of evidence that a house with a big garden has a lot more biodiversity in it than a field that it might have replaced. This is a view that is rarely considered in the UK. Instead, development gets equated to more countryside going under concrete!

Wind Farm Profits Shared in Germany

The attitude to wind farms is also very different in Germany. While 99% of the UK’s population don’t want wind turbines near them, the Germany system creates an incentive. Profits from the wind turbines are shared with the village as well as the people putting the scheme forward.

The UK Land Paradox

Although land is nominally privately owned, it is controlled by the council, sometimes by the state, and affected by the neighbours! It’s not quite a free market and it’s not quite state controlled.

Boom and Bust Less Likely in Germany Due to Intervention

Driven by the free market in the UK, we are less likely to interfere in the land. Paradoxically we’ve ended up with all the deals being done with big landowners and developers, and the little guys getting cut out of the system. Whereas the Germans have been far more interventionist they have ended up with a freer market and a much better functioning market! They don’t have the huge boom and bust of the UK housing market. They build better homes and seem to satisfy what people want.

Most German Spec Building is in Cities

The only spec building that goes on in Germany is when apartments are constructed in cities. Clearly the custom build model would not work for a complex structure like this. Almost everything out in the small towns and the countryside is just done by individuals working with all these house building companies.

Neighbourly Disputes Less Likely in Germany

Whereas British councils invite objections from neighbours, in Germany you’re expected to resolve any issues with your neighbours face to face. You must go around to your neighbours and talk it through. British culture seems to have developed an adversarial approach, particularly when it comes to planning!

Changing Systems in the UK Would be Hard

Mark likens the prospect of changing the UK system to turning around a super tanker – it couldn’t happen overnight. The industry doesn’t exist. It would take years of much more conciliatory planning for the confidence to build up for these businesses. Of course, there’s no reason why it couldn’t happen in theory.

Factory Building Approach Risky in UK’s Market

While it is clear that factory building can continue in all weathers and is much more efficient, it hasn’t really ever taken off in the UK. There’s more of it in self build than there is in mainstream building. Part of the concern is due to the huge capital investment needed. If the market has a steady demand then that is one thing, but the UK’s boom and bust extremes make it a realistic that you could go out of business in the bad times.

For Change to Occur Councils Need to be More Interventionist

UK councils have to stop being frightened of the way the system is at the moment and become much more interventionist. Some councils are taking on board the idea that land should be retained for self builders. Mark talks about some great examples in Shropshire, where they’re even including self build in their affordable housing quota so they can actually bring forward schemes that they know developers aren’t going to get into.

Government Blind to How Much Spec Build There is

While the UK government have supported the idea of creating more self build opportunities, Mark’s closing thoughts are that the government doesn’t see the reverse of the situation. To get more self build will mean a reduction in the amount of spec build. As spec builders have long arms in deep pockets and are very effective lobbyists, it’s hard to see them giving up their grip on the system as it now exists.

Buy the latest edition of the Housebuilder’s Bible (affiliate link)

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Transcript

Download a transcript of the interview with Mark Brinkley.

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March 26, 2013