KEY LEARNING POINTS
- Custom Build developments that employ this model are better suited to larger sites – 150+ homes would be ideal
- Most potential purchasers don’t currently understand what ‘custom build’ really means; there is a major education/communication exercise needed to help consumers understand the concept and the potential benefits it offers
- Working in partnership has been a key feature of this innovative project. Carillion Igloo, the local planners, the HCA, the home manufacturers (and many others) have all supported the initiative and gone that extra mile to ensure its success
- It took time to identify the six selected manufacturer teams, and to finesse (and test) their homes to ensure they could be built to the required standard and for the target price point
The site forms part of the Heartlands regeneration initiative in Pool – a built up area midway between Redruth and Camborne. The land was formerly used for tin mining. The HCA has played a big role in regenerating the area, preparing a master plan and selling off land to various housebuilders. Some of the early phases are now complete.
The plots are all 20m deep (with 10m to the rear, reserved as garden). The mid terrace plots are usually 6m wide, end of terrace plots are 7m wide and there are a number of detached plots that are 8m wide.
The site reserved for the custom build homes is the L-shaped area to the North West
So a three bedroom home on the adjoining site (80 sq m) is currently available for £175,675. The nearest equivalent on the Igloo site is a 88 sq m three bedroom home, costing £185,000. So purchasers get a house that is ten per cent larger (and a better design/specification) for an additional five per cent cost.
Concept illustration showing the interchangeable units arranged in terraces
This is the largest private-sector custom build development in the UK and it is being delivered by Carillion Igloo in partnership with the HCA on a former tin mining complex in central Cornwall. Ultimately it will provide 54 custom designed homes. Would-be self builders have a choice of six home manufacturers’ standard houses, though each home offers a range of options. The plots will be for sale at around £50,000 each and an entry-level house will cost around £130,000 to £140,000
For the purposes of this Toolkit we have made the following definitions:
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- ‘self and custom built homes’ as properties commissioned by people from a builder, contractor or package company (this is known as ‘custom build’ housing). When people physically build themselves, sometimes with help from sub-contractors, this is known as ‘self build’ housing. We call all these people ‘private homebuilders’.
- ‘serviced building plots’ are shovel-ready parcels of land with planning permission, laid out and ready for construction with access and utilities/services provided to the plot boundary. Some private homebuilders just purchase a plot; others opt for a ‘shell’ home (that they then finish off), or they select from an extensive menu of options offered by developers/builders.
- ‘group projects’ mean homes built by private homebuilders who work as a collective.
However, Igloo has streamlined the Dutch approach for its UK projects – in this case limiting the plot sizes to just three, and restricting the basic house designs to six. (In Holland scores of different plot sizes and house options are available).
The company has also set out to make the ‘customer journey’ as simple as possible.
The ‘customer journey’ at Homemade@Heartlands
At the time of writing (August 2015) no formal marketing had been undertaken, but around 100 people had already registered an interest and at least one of the homes has been pre-sold.
Igloo is convinced this ‘model’ has much to offer. Its pitch is that it provides the would-be self builder with a reasonably wide range of design options and choices, a firm price, and a clear timeframe for delivery. Effectively it de-risks the process for them.
It also believes it can deliver a larger and better quality home, compared to an equivalent house from a traditional housebuilder.
So a three bedroom home on the adjoining site (80 sq m) is currently available for £175,675. The nearest equivalent on the Igloo site is a 88 sq m three bedroom home, costing £185,000. So purchasers get a house that is 10% larger (and a better design/specification) for an additional 5% cost.
It achieves this – in part – by avoiding some Stamp Duty (which is only charged on the plot/foundations, rather than the full sales price).
Custom Build projects are also usually exempted from CIL charges. In Cornwall no CIL charges are applied anywhere so this savings is not available here; in most parts of the UK (where CIL is usually levied) this could also reduce the cost for the purchaser.
Architect’s sketches showing how the project could look once fully built out Photographs showing the undeveloped site
THE SIX SELECTED TEAMS AND THEIR DESIGNS
Igloo was keen to provide a practical range of well-designed, high quality, good value homes on the site, so it organised an ideas competition among teams of architect/builders and system manufacturers (timber frame, SIP and factory built homes).
Initially 24 teams registered an interest. For the first stage each team was asked to summarise why it thought it would be a good contender, who was in the team, and they also had to provide details of their financial robustness.
Igloo shortlisted 12 teams based on the initial expressions of interest and then set them all a challenge to design a home (with a number of options, so that customers could adapt it) that would sit on a 6m wide by 20m deep plot. They also set a target construction cost. It didn’t set any energy performance targets, arguing that a sustainability upgrade option could be one of the choices offered to purchasers.
From the 12 entries six teams were selected for Heartlands project, though most of the others are expected to be involved in the future on other new developments the company has in the pipeline. For example, if Igloo acquires a site in the Midlands it may work with the local council to select six house designs from the 12 that are best suited to the local area.
The six teams for the Cornish project include some well known self build kit home manufacturers (Potton, Frame UK), a local team (Cathedral Builders with architect AOC), and some innovative teams (straw bale pioneers Modcell). Two SIP manufacturers made the cut too (Riko from Slovenia and Dwelle from the UK).
The competitiveness between the six selected teams has been harnessed by Igloo, as none of them wants to be significantly more expensive that the others.
HTA / Potton
White Design / Cadfan Developments / Modcell
Limiting the range of options
When would-be self builders are presented with limitless options it can be difficult for them to make decisions. With six main housetypes (each with a menu of costed options) it becomes a lot more manageable
Ash Sakula Architects / EaseBuild / Frame UK
Mae Architects / Riko
AOC / Cathedral Builders
The land was initially identified by the HCA as being suitable for a custom build initiative.
Carillion-Igloo was selected to tackle the redevelopment because of its regeneration track record and the innovative approach to custom build that it proposed. The company offered to develop the site as a joint venture with the HCA, with the two parties sharing the profits.
The area had some planning challenges as it next to a World Heritage site, so lots of sensitive statutory consultees were invited to give their views, including UNESCO and English Heritage.
In the end there were no design related objections and the planning team from Cornwall Council was supportive. The permission that was granted is a hybrid; so there is full detailed permission for all the infrastructure works, and then outline permission has been granted for the homes. A Design Code has been approved for the site and each of the six homes features in this.
A Design Code has been approved for the site and each of the six homes features in this
From a purchasers point of view it means that securing planning permission for their new home should be very straightforward, so long as the home complies with the Design Code (applications will be submitted by the purchasers’ home manufacturer and it will be dealt with under ‘Reserved Matters’, with the council committed to turn all applications around in five weeks or less).
Working in partnership
The developer and landowner worked in partnership on this scheme, and will share the profits. Public sector organisations should be willing to work alongside developers to help enable more custom build homes
Igloo has not had to fund the purchase of the land up front (the HCA will get a share of each plot sale), and around £600,000 of grant aid has been provided to help remediate the site. There are three mine shafts that need to be capped, Japanese knotweed is present, and noise attenuation measures have to be provided.
Igloo reckons it has invested in excess of £500,000 in the form of its own team’s time and other costs during the last three years, just getting to the starting line on the project.
Igloo will make a profit on the cost of the planning, infrastructure and sales; and the home manufacturer will secure a contractors margin on the construction of the homes.
Most developers would normally aim to make about 25 per cent; and a contractor would aim for a ten per cent margin.
COST OF THE HOMES
Four of the standard homes currently have a price point of around £130,000 each to build; two of them are nearer £140,000. The final costs are still being finessed and were not due to be released until late in 2015.
The terraced plots cost £50,000, the end of terraces will be a little more, and the small number of detached plots will be significantly more.
This brings the total cost of a typical three bedroom terraced home to around £180,000 to £190,000. Of course purchasers can opt for higher levels of specification or other ‘add-ons’ and this could take the price up.
On the adjoining site roughly equivalent three bedroom homes built by Linden Homes are currently available for £175,000 (but they are about ten per cent smaller, and Linden’s purchasers have a very limited scope to vary the design/specification).
Although Igloo has only had a single ‘holding page’ online to date, more than 1,000 people have visited it and 100+ people have registered an expression of interest. At least one of the first six homes has been pre-sold too.
It is difficult to gauge the likely ‘conversion rate’ – from ‘expressing an interest’ to ‘confirmed sale’ – but Igloo think it will be quite modest (perhaps two to three per cent) suggesting that it will have to generate lots of enquiries to sell the whole scheme.
The first house was sold to a couple from Suffolk who plan to retire to Cornwall. Igloo expects the catchment for the project to be nationwide, not limited to the local market.
Explaining the concept of ‘custom build’ is challenging
Igloo believes it has a two-stage marketing challenge – firstly to explain the concept and benefits of ‘custom build’ and then to convince people to invest in its homes
The early enquiries Igloo has received has convinced it that there is a major job to be done to explain the basic concept of custom build, and the benefits it can bring. So it will be launching an animation on the project’s new website in 2016 (www.homemadeheartlands.co.uk
Some local newspaper advertising is planned too, and agents (Humberts) have recently been appointed to handle the sales.
A modest Plot Shop will also be established on the site in the spring of 2016. This will be housed in a temporary building at the end of the first six homes. It is unlikely to be permanently staffed, but will be used by the agents and others when people make appointments.
The first six houses will act a bit like ‘show houses ‘- Igloo is working with the owners to provide occasional access so prospective purchasers can look around them.
Igloo expects to spend a lot on marketing this development, as it’s the first of its kind. Inclusive of all the agents’ fees, the total marketing spend is expected to be in the region of £500,000.
On future projects, once people are more familiar with custom build, the marketing cost should be nearer £5,000 a unit.
The NaCSBA Research & Development Programme is funded by the Nationwide Foundation and aims to promote the self-build and custom build sector as an affordable route into housing for a greater number of people in the UK.
For further information, please visit:www.nacsba.org.uk or www.selfbuildportal.org.uk