A conversation about a possible PhD, between custom-build expert Yan Lewandowski and lecturer Dr John Paul Kawalek of the Sheffield University Management School ended with an idea for a novel way of financing and building affordable homes.
CrowditBuildit was born, and with the support of Sheffield City Council a plot has been secured to build six custom-built, semi-detached, affordable homes. Sheffield is one of 11 vanguard councils given government funding to promote and enable custom and self-building. Part of that Right to Build pilot scheme remit was identifying suitable land.
Homes are being offered for sale at 13 per cent below market value and, if successful, the business model will be rolled our across the country.
“There are a few examples of build to-rent property projects that have been crowdfunded but they are loan-based. This equity-based way of doing it is new, as is using it for custom building,” says John.
The six Sheffield semis, aimed at first-time buyers, have a price tag of £99,000, which is £16,000 below their market value of £115,000. Resale clauses to deter speculators state buyers can only sell for 80 per cent of the market value in the first year of ownership and 90 per cent in the second year.
The projected return for investors in the Sheffield project is at least 8.5 per cent. As soon as the build is complete and the properties are sold, the original outlay is returned along with the interest.
“One of the main reasons for doing this scheme is to allow young people to buy a home. When the house is built there will be ready-made made equity in it, which means the owners will end up with a sizeable deposit on their next home. If they stay then they could be mortgage free within 15 years instead of the average 25,” says Yan.
The pair are already looking ahead and exploring the options for future projects.