The Build Cost Housing [BCH] mechanism proposes a new type of tenure whereby the sales price of a home is based on its build cost and not a traditional market value. 

These homes and the land on which they stand would be bought and sold via a Build Cost Housing Exchange [BCHEx] portal. The purpose of the BCHEx would separately record build costs from land values and to facilitate transactions without distorting the housing market.

The landowner retains ownership of their land when providing it for Build Cost Housing [BCH]. It becomes a permanent non-incoming producing asset, ideally within a commonhold agreement. They agree to lock away land value until the site is developed at which time their ‘gold’ becomes a tradeable asset if they choose to sell it.

When someone buys a new Build Cost Housing [BCH] home two valuations are made (1) build cost valuation, and (2) existing market valuation. The percentage discount to market value is recorded on the Build Cost Housing Exchange [BCHEx] portal so when the homeowner sells their home, they do so at the discount to market price. The difference in value between the discount to market price and the market valuation, based on the homeowner owning the land, would remain on the landowner’s balance sheet.

Homeowners would benefit in a rising market, but they would not receive a windfall profit at the expense of the landowner who retains the land value which would be a tradeable asset.

Build Cost Housing [BCH] in the UK would have its own rules and unique way of working. Other countries with alternative mechanisms and secondary housing markets to safeguard the financial interests of local homeowners include Switzerland, Austria, China, Guernsey and Jersey.

The plan considers the commercial and practical realities of landowners, finance and service providers who are involved in the housing industry. NO CHANGE TO PRIMARY LEGISLATION IS REQUIRED, but the government and Whitehall’s full support is required for the Build Cost Housing [BCH] mechanism to work to its full potential nationwide.