Self-build finance in the spotlight: financing your project

Posted on May 2, 2013 by Ecology Building Society

So you’re thinking about self-building. Congratulations! This is an exciting opportunity for you to live in a way that’s more socially and environmentally aware. Now to that million-dollar question: how much is this all going to cost?

Image of friends helping out with straw bale building project

Doing some of the building work yourself, or with the help of friends, can save costs

Whether self-build is financially viable is likely to be one of the first things you ask yourself. If you feel daunted by the thought of grappling with budget plans, don’t panic – you’re not alone! For many this is one of the most challenging hurdles to overcome. But by taking time at the start of your project to put together a strong budget plan, you’ll smooth the way for yourself further down the line. Let’s think about some of the key factors you’ll need to consider…

One of your first steps will be purchasing a plot. Finding your ideal site is an exciting stage as it means you can start visualising the finished property and life in your new home. But finding land suitable for development in the UK is – more often than not – both challenging and costly. More popular areas are usually highly developed and plots can be affected by planning restrictions. Plus they’re constantly being sniffed out by large-scale developers. When considering a purchase, be on the look-out for hidden legal and financial issues. These might relate to missing deeds, access rights or planning conditions, which can all affect your willingness and ability to purchase.

But it’s not all bad news. On 15 April 2013, the Government announced they propose to exempt self-builders from the Community Infrastructure Levy beginning in the summer of 2013. The tax typically adds a hefty 10 to 15% onto building costs, so the move represents a significant step in favour of self-builders. With only 10% of the UK’s new homes being self-builds, we fall far behind our European neighbours. But it seems this is down more to the complexity and expense of self-building in the UK rather than lack of interest – events like this year’s first National Self Build Week reflect a deep and widespread motivation for self-build across the UK. Let’s hope that dropping this tax encourages more inspiring, independent green builds to sprout up at home!

Self-builds generally save 10 to 15% on the purchase of an equivalent property, but it’s wise to reserve that saving in case of unforeseen expenses – a healthy contingency of at least 10% of costs is recommended. Those costs will vary enormously from project to project and depend on factors such as the materials you choose, how much of the building work you can do yourself and how quickly the build will progress. Developing your haggling skills is worthwhile: comparing prices and negotiating with suppliers and trades people can make a real difference to your budget.

Choosing the right mortgage provider is another essential part of your budgeting plan. Take time to look beyond interest rates – you want a lender who understands and cares about your project, and can offer genuine expertise in self-build lending. Some mortgages might seem like a great deal on the surface but are less desirable when you get down to the nitty-gritty of the small print. Check out how much your lender will charge for something like a photocopy of your deeds, a transfer of equity or a change to your repayment method.

When budgeting, it’s important to take a long-term view – be mindful that the choices you make now will affect your finances over the lifetime of the completed build. An energy efficient new home built with sustainable materials isn’t just better for the environment; it’s good for your wallet too. By considering factors like insulation, renewable energy sources and heat recovery systems, you can reap the benefits later on in the form of lower utility bills.

There are further financial incentives available for choosing to go green – for example, Ecology’s C-Change scheme rewards members who prioritise energy efficiency. If you’re upgrading your existing home the Government’s Green Deal could help you to cover initial installation costs. The scheme allows homeowners to install energy saving measures with no upfront costs; instead, the cost can be repaid through your energy bills.

You can’t be too thorough when it comes to putting together a budget plan: draw it up, inspect it, pull it apart and re-sketch until you’re confident that your planning is watertight. And just remember, those lamp-lit, coffee-fuelled hours spent comparing quotes and tweaking spreadsheets will be worth it when you’re moving into a beautiful, sustainable new home.

A day in the life of Ecology’s Business Development Manager

Posted on April 15, 2013 by Ecology Building Society

As part of her placement at Ecology, Forum for the Future scholar Philippa Parry spent a day shadowing Ecology’s Business Development Manager, Jon Lee. Here she reports back:

Jon talks to Terry, member of a housing co-operative in Sheffield

A sunny Tuesday morning finds us in a staff meeting in the straw bale meeting room, where Ecology’s past year is being summed up by Finance Director Pam Waring. Pam gives us the important numbers and some of their context, and looks ahead to the projections for 2013. As ever in Ecology, there are only projections, not sales objectives – something that is especially important for the Business Development team. It ensures that all their decisions are made on a case-by-case evaluation of the project’s credentials (financial, environmental and social), rather than to meet targets.

It’s then the turn of Ecology’s Communications Manager, Anna Laycock, to look ahead to 2014 and the longer-term strategy of Ecology. The focus is on the changes that Ecology will need to make internally in order to accommodate the expected growth. One example is the development of robust policies normally more relevant to larger organisations, such as the new procurement policy. This will help staff ensure that they have thought about relevant social and environmental issues when making office purchases.

The meeting over, Jon heads back upstairs to the upper level of Ecology – the floor of which acts as a heat store for the building – where he had started the day with a full inbox. The rest of the morning sees him communicating with prospective and current applicants for commercial mortgages. One is a Manchester-based housing co-op looking to do an energy efficiency retrofit of a house that has been standing empty for several years. Jon takes them through some of the information that they will need to apply for a mortgage and how to present it.

A very different application is from a couple in Cambridge looking to build a house next to their agricultural business. There are some planning issues with this type of project that are quite complicated for applicants to deal with, as the land is ‘agriculturally tied’, but Jon is able to direct them to a previous issue of the newsletter that deals with just this issue.

Jon and Daniel Capstick, Ecology’s Business Development Officer, then get together to talk about the options for a cohousing group in London who want to take out four mortgages across their six new properties. On a project like this with an unusual setup, which often deters other potential lenders, Dan and Jon are able to pool their knowledge and spend time unpicking the complexities. This ensures that the agreements make sense for both the cohousing group and Ecology’s members, and that all involved are getting a fair deal.

After lunch Jon and I head over to Sheffield to visit an established housing co-op who are long-term members of Ecology. Making visits in person to borrowers is the ideal way to make the connection between the job being done in the office and the impact it can have by enabling people to live in a more socially and environmentally positive way. The Sheffield-based housing co-op that we visit plans to invest in an energy efficient extension across their four terraces, giving significantly more room to first-floor bedrooms at the back of the properties, as well as more spacious kitchens and living areas on the ground floor.

This was the first time that Jon had met this particular co-op in person to discuss their activities, and the afternoon allowed Jon and members of the co-op to have a longer chat about the project’s aims and financing. It also allowed the housing co-op’s representative, Terry, to talk through their existing mortgages with Ecology in order to identify how best the costs could be spread.

As we leave the site, there’s a palpable sense of unity of purpose and positivity. It strikes me how good it must feel to be in Jon’s position: to work as an enabler, offering finance for people to improve their homes (and lives) at a fair rate, respectful of society and of the environment. For borrower and lender to be able to have a frank discussion with a sense of mutual respect, where terms are laid out on the table and the decision-making process is clear and transparent, sets a high bar to others in the mortgage market.

You can follow Philippa on Twitter at @philippaparry.

Not just any placement

Posted on March 22, 2013 by Ecology Building Society

In February Philippa Parry, a Forum for the Future scholar, began a six week placement with Ecology. Here she reflects on her first impressions of a very different sort of financial institution…

It’s not just in any placement that you work in a grass-topped building, where as you wait for a meeting to start you can watch the energy generated and carbon saved tick up and down respectively, while the solar panels work overhead.

And it’s certainly not just any placement when you can look at those same surrounding hills and realise that your forebears would have known them too.

My placement at Ecology Building Society as part of the Forum for the Future MA Leadership in Sustainable Development is proving to be particularly special for this last reason: just on the other side of Ilkley Moor is my last living relative in West Yorkshire, still in the same house that her father, my great-grandfather, built himself.

My great-grandfather’s idea of energy efficiency was likely to have been somewhat rudimentary compared to Ecology’s average self-build. The principles of sustainable design which it encourages its borrowers to adopt are also present in the Society’s head office, which incorporates extensive insulation, optimal heat retention through solar gain, and innovative features such as sun pipes and rainwater harvesting.

It is for precisely this reason that Ecology exists: to help those who want to build their own sustainable home or access affordable, low impact housing – at a time when owning a house is becoming an ever-more distant dream to younger generations.

Not just environmental benefit

Despite its name, Ecology’s focus is not just on the environmental benefits of eco builds. Its core values are rooted in social as well as environmental capital, meaning that it takes steps to address social justice within its activities.

With house prices still on the up, Ecology’s lending to housing co-operatives and cohousing projects (when many high street lenders will not lend) means that more people can live in properties whose future they control, without having to find a prohibitive deposit on an individual basis. These types of organisations can also help to protect their members from finding themselves unable to make mortgage repayments, and in worst case scenarios losing their home while retaining the debt – something which is becoming increasingly a worry as living costs rise while wages do not.

Ensuring that green properties are made available to as many people as possible – by supporting a wide range of home ownership models and refusing to lend on large-scale buy-to-let – also speaks to my belief in social justice. To have the chance of building a sustainable future, everyone must have the chance to build their own green vision.

Ecology also addresses social equality internally, with no member of staff paid more than five times the lowest full-time salary paid – but this is just a part of what they do to address wider social issues.

Personal journey

This placement in finance, third of the four sectors that the course covers, has shown me the personal satisfaction that there is in working for an organisation that is actively involved not only in pushing for improvements in how we live, but also in offering its own alternatives.

The space and time provided by a 9 to 5 routine and a five-minute bike ride commute has also reminded me of the first year I spent in Spain as a teacher in a rural Catalan town. As in Silsden, life there enabled me to slow down, breath deeper and look around more than the hectic pace of city-based study.

These insights, however, will last me a lot longer – that I think better outside of a city, I appreciate the time to dedicate to things outside of work (in this case: more work), and that working for something I believe in brings a sense of peace. It is an awful lot easier to accept that your work is only a grain of sand if others around you are putting their grains in too.

You can follow Philippa on Twitter at @philippaparry.

SuperHomes: Smart thinking

Posted on March 1, 2013 by Ecology Building Society

SuperHomes Week takes place this year from 16 to 24 March, with green properties around the country opening their doors to showcase the best in eco renovation. Visiting a SuperHome is a great way to find the inspiration and information you need to plan your own retrofit project. SuperHomes’ Roger Hunt explains how one homeowner cut his carbon emissions – and his energy bills!

Amongst the gently rolling landscape of Aylesbury Vale in Buckinghamshire, there’s a subtle shift in behavior, as a growing group of homeowners seek to reduce their energy bills and realise that we owe it to future generations to tread more lightly upon the earth.

Robert Smart is one of these people and began embracing the idea of being ‘eco’ around 15 years ago. Since then he’s adapted the way he and his family live and, equally importantly, has gradually worked to reduce the energy consumption and CO2 emissions associated with his house. As a result, he’s seen an impressive year-on-year reduction in his energy and water use.

Originally a pair of agricultural workers’ cottages, Robert’s home dates from somewhere between the 1900s and 1930s. By 2003, when he and his wife Palie and their two children moved in, it was a single detached property. Insulation and draught proofing were obvious early steps, then around 10 years ago he added solar thermal panels to the roof, to generate hot water. Wood burning stoves followed and, equipped with chainsaw and trailer, Robert delights in locally sourcing the wood that he burns. As a consequence, he reckons that his heating bills are reduced by around £900 per year, while oil use has been reduced to a bare minimum.

Recently, photovoltaic (PV) panels have been installed on the roof to generate electricity – leading, in the first year, to a 45% reduction in electricity costs. Together these measures, helped by conscious efforts to reduce energy waste, have contributed to an impressive carbon saving of 67%. What’s more, there’s been a good return on the investment and the house has become more comfortable for him and his family.

This smart thinking means that Robert’s home has achieved SuperHomes status. As a sustainability officer with the local authority in Aylesbury Vale, he’s now actively building links with others in the local SuperHomes network, who are renovating older homes and cutting their CO2 emissions by at least 60%. What’s more, he’s keen to spread the word and encourage others to become SuperHomers.

Many of these pioneering owners will host free Open Days during SuperHomes Week from 16 to 24 March, so there’s a chance for everyone to see eco renovation at its impressive best. SuperHomers are genuine early adopters who can speak from experience so there are plenty of good ideas to be had for greening your own home.

To find out more or to pre-book a place on a free tour, visit www.superhomes.org.uk.

Easy PV – Pam’s story

Posted on January 10, 2013 by Ecology Building Society

Small-scale renewables can help you earn money as well as reduce your carbon footprint – but what’s it really like to turn your home into a mini power station? In 2011 our Finance Director, Pam, installed solar photovoltaic panels on her house. She tells us about her experiences…

Our three-bedroom bungalow already had loft and cavity wall insulation, and five years ago we added a solar pipe to channel sunlight into the ensuite shower room, as it has no external walls and therefore no windows. After Dan, our Business Development Officer, installed solar panels on his home, I began thinking about whether it was the next step for us. Although it would be a significant investment, it seemed like the right thing to do. I hated the fact that we were wasting energy from the sun that could be used to power our home.

Dan had already done lots of research into the solar panels and I used the same local family firm that he had chosen. I contacted them in October 2011 and they arranged an installation date, which fortunately was before the rate of the government’s Feed-in Tariffs changed, meaning I could get maximum return for my investment. The company were working flat out to set up as many installations as possible before the deadline.

We already had a mortgage from Ecology and added the cost onto our mortgage using the C-Change Energy Improvements scheme. This gives a discount of 1% off Ecology’s Standard Variable Rate (currently 4.90% – the overall cost for comparison is 5.0% APR) for money borrowed to install energy efficiency or renewable energy measures.

Before the installation, the company came to my house to assess where to put the panels and where the meters would be fitted inside my house. Although there was some shading from trees, there was enough space to get reasonable exposure to the sunlight.

The panels were installed in November 2011 and the process only took a few days, although the scaffolding was up for about a week. We didn’t really have to prepare the house – we just ensured that the installers could access the area inside the house where they would install the meter and inverter. Domestic users can install up to 15 panels, so we had eight panels on our main roof and seven on our extension. Because the back our home isn’t overlooked, none of our neighbours really noticed the difference!

Now that the meters are installed, we can look at how the panels are performing whenever we want. It gets very addictive, especially in the summer! It makes so much sense to use the energy from the sun – I can’t understand why all new buildings don’t have renewables and recycling built in.

We filled out our paperwork for the Feed-in Tariff and submitted the documents via our energy supplier. We had to wait a while for the registration to go through, because lots of people sent in their paperwork just before the Feed-in Tariff rate was cut. We received our first payment in July 2012, giving us £614 for the initial six months of operation. We’re really pleased with the return, especially when we factor in our reduced energy bills.

My one tip for anyone considering installing solar photovoltaic panels would be do to your homework on the firm. Picking the right installers can mean a very smooth operation – and vice versa!

Your home may be repossessed if you do not keep up repayments on your mortgage. An early repayment charge may be payable if you repay all or part of your mortgage within the first four years.

A year to remember: 2012 in review

Posted on December 20, 2012 by Ecology Building Society

: Winter view of Silsden, West Yorkshire, home to Ecology’s eco-HQ

When you’re a financial institution that aims to change the world, there’s no such thing as business as usual, and there’s certainly never a quiet year. But it’s fair to say that 2012 has exceeded all of our expectations, so as the year draws to a close, it’s a good time to recap some of the highlights.

In January we launched our brand new website, including this blog, our collection of member stories, and our revamped resource hub. The reception was fantastic and we were proud to have a web presence that reflected the passion and liveliness of our team and our work. We were even shortlisted for a Yorkshire Insider Digital Award!

Our online progress continued in February, when we launched our e-newsletter. We wanted to keep members and non-members updated on our work and interesting developments in the green building and ethical finance sectors, and we’ve seen subscriber numbers climb every edition. If you you’re not a subscriber, why not sign up today?

March was one of our busiest months, as we launched our Shrink This campaign to encourage homeowners to improve the energy efficiency of their properties. The campaign aimed to promote our C-Change Retrofit scheme, which offers a discount on our Standard Variable Rate (currently 4.90% – the overall cost for comparison is 4.9% APR) for every grade improvement you make in your home’s Energy Performance Certificate.

We also announced our new partnership with Parity Projects, who offer independent, individual home energy assessments – the first of our partnerships to promote retrofit. Later in the year, we also teamed with The Energy Saving Co-operative to offer a mutual, ethical alternative to the Government’s Green Deal.

As ISA season reached its height in April, the buzz generated by the Move Your Money campaign started to have a real impact, especially on our Twitter and Facebook feeds. It was fantastic to see more and more people calling for an ethical approach to finance – and putting their money where their mouths were!

We were also seeing an increasing buzz around self-build, or ‘custom build’ as the government likes to call it, and in May our Chief Executive Paul Ellis joined a delegation including Grant Shapps and Kevin McCloud to Europe’s largest self-build development in Almere, Holland.

June and July really were phenomenal months for us. As the crises of LIBOR fixing and mis-selling of hedge fund products hit the headlines, ethical alternatives finally took the spotlight, and we reached millions of people through coverage in the national press, on the radio and even on TV! The timing couldn’t have been more significant, as August marked five years since the start of the credit crunch.

September brought more media coverage as we released our excellent interim results, showing that green really is good for growth. At the end of the month we hosted an international delegation of leaders in ethical finance as part of our membership of INAISE, the International Association of Investors in the Social Economy. It wasn’t all work – we made sure they experienced a little bit of Yorkshire hospitality and the stunning scenery around our headquarters in Silsden!

National Ethical Investment Week in October is always special for us, but this year was extra special, as we announced that our savings balances had passed £100m for the first time. There could be little better evidence of a widespread shift towards sustainable, socially useful models of finance.

November brought an accolade of a different kind: we won Silver at the International Green Awards, a global awards scheme that recognises the best of the best in sustainable business. The judges of our WWF Green Game Changer award saw the potential of C-Change Retrofit to inspire others and drive the transition to a more sustainable future.

Now December is upon us, we’re planning for a very busy 2013, in which we want to help even more people live sustainably and save ethically. If you’re already a member, thank you for helping us achieve everything we did in 2012. And if you’ve not yet joined us, why not make 2013 the year you become part of a very different way to do finance?

Your home may be repossessed if you do not keep up repayments on your mortgage. An early repayment charge may be payable if you repay all or part of your mortgage within the first four years.