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1 Lending in the Self Build & Renovation Market Private housebuilders and lenders will need to adapt their long-term business model in response to the fundamental shift in mortgage availability. We will establish a selfbuild initiative for Scotland and also continue to engage with lenders to ensure there are selfbuild mortgage products available to creditworthy borrowers. Homes Fit for the 21st Century The Scottish Government's Strategy and Action Plan for Housing in the Next Decade:

2 Lending in the Self Build & Renovation Market Agenda Background to the Market Why Lenders Should Support the Sector Lending Processes & Risk Management

3 Background to the Market Around 17,000 self build projects each year (14,000 in 2010) In 2009, 1 in 3 new detached homes were self build Mortgage borrowing for the sector is over 2bn annually Almost 80% of Borrowers are over 40 75% are married Most BuildStore customers are 3 rd or 4 th time mortgage holders

4 Why Lenders Should Support the Sector Categories Social Economic Political Commercial

5 Why Lenders Should Support the Sector Social By definition Self Build creates new housing that families want to live in Self Build allows Communities to grow organically and families to remain closer Self Build is a key promoter of Sustainable Construction Self Build provides focus for Lenders to promote growth in their Local Communities

6 Why Lenders Should Support the Sector Political Self Build is compatible with the Government s strategy for the supply of new homes, offering mixed tenure housing options

7 Why Lenders Should Support the Sector Economic Self Build creates or maintains jobs in difficult economic conditions One Self Build project equates to 7 construction jobs for 1 year 1 billion of lending allocated to Self Build will provide 6000 new homes and over 40,000 jobs

8 Why Lenders Should Support the Sector Commercial High Margin BuildStore Best Selling Products Rate 6.14% 5.89% Product Description Lifetime Variable Rate to 80% LTV Lifetime Variable Rate to 80% LTV ERC 2% for 2 years 5% for 3 years Low Loan to Value 58% Low Risk Full Status lending in Self Build behaves as well as or better than Prime

9 Lending Processes & Risk Management Perception of Risk Risk Management process Pre Build Cost Verification, Building Systems Analysis Project Team Verification Site Insurance and Structural Warranty Risk Management process During Build Stage Inspection and Certification Build Monitoring Lender Portal

10 Lending Processes & Risk Management

11 Lending Processes & Risk Management

12 Lending Processes & Risk Management

13 Lending Processes & Risk Management Additional Protection MIG now available for Arrears Stage Payment lending Cover from 70-90% on land and build costs Build Out Cover Cost of professional fees to establish Build Status, and the cost to Build Out against the Final Value. Cover in respect of the Borrowers outstanding input as per agreed Cashflow Professional Project Management to completion of Building Project and handover for sale Underwritten by Jubilee Insurance

14 Lending in the Self Build & Renovation Market Any Questions?