The Saturday Interview: John MacDonald believes he has the solution to the property sector�s current woes, writes David Ross

DAVID ROSS

As one surveys our property/housebuilding sector, it is difficult not to recall the American actress and comedian Lily Tomlin when she predicted, "Things are going to get a lot worse before they get worse." Certainly the ever-multiplying "For Sale" signs are gloomy symbols of the perilous straits the industry is now trying to navigate.

House prices in Scotland are falling. The latest Bank of Scotland House Price Index for the third quarter of 2008 shows a -6.0% annual fall in the average price.

This may be significantly less than the UK average of -13.4%, but properties are sticking hard north of the border. and construction firms are paying-off staff. Yet the housing need is still very real, not least in the Highlands and Islands where, historically, young local people have been unable to compete against incomers from the south making lifestyle changes.

Although that pressure may lessen in the current economic crisis, the houses are no longer being built to allow developers to include a low-cost/social housing element as currently demanded by the likes of Highland Council. It is a bit of an impasse.

But John MacDonald, the 48-year-old founder of Skye Homes Ltd - the Portree-based kit-home company which specialises in bespoke designs to fit the Highland landscape - thinks a bit of imagination could help.

"We have to try something new. The demand isn't there just now to allow a developer to sell the 75% of his homes he needs to make a profit. We have got to find a way to allow the industry to get going again, but in a way that provides young people with lower-cost options at a time when the 100% mortgages have disappeared and may never return.

"I firmly believe that the solution may be in introducing the self-build element into different types of project. Work should be done on developing a formula that would see a developer or a housing association putting the infrastructure and services into a site, then allowing different levels of self-build thereafter.

"New householders could chose to have an approved contractor erect their house, and get it wind and water-tight, then they take over and do things themselves. Or perhaps they might opt for doing everything themselves, again with approved contractors to help.

"With a bit of imagination and flexibility in the system this could be made to work for private houses, for part-own/part-leased houses, and perhaps even for houses built for social rent.

"It has the potential to create a whole new relationship between a family and their new property. The mortgage industry should be thinking about a whole new type of product that would recognise the hard work people themselves are willing to put into their new properties. Self-build could help lead us out of this. The demand is there. I have talked to a lot of young people locally who say they would jump at the chance."

After an hour of watching Grand Designs we all feel like going out to start digging foundations for our dream house, but MacDonald thinks it is more than that. "I think it is something that would particularly appeal in rural areas."

Many already find it appealing. "We have grown 35% in each of the last three years and now have a turnover of £2.3m. And are employing 17. While we don't expect to maintain that level of growth we are confident we can hold steady. A recent survey of 500 self-builders/renovators throughout the UK revealed that over 90% were still intending to continue despite the credit crunch.

"Most of our clients are not coming to us because of a snap decision. There is momentum behind their plans, which often involves investing in a new way of life as well as a new home. Many of them are relocating from elsewhere, because they want something different from life or are coming to retire.

"They are aware that as self-builders, as long as they choose the right location, they will have the best chance of gaining positive equity in their new homes even in the current climate."

MacDonald's commitment to self-build is more than just salesmanship. The whole ethos of the small company he set up just six years ago has been to build houses which are worthy of his native Skye.

For generations his family have been adding to the environment of the island. His great grandfather was a stonemason, as were most of his sons, and one had the contract to build the first road between Staffin, at the north of the island, and Portree before the First World War.

"It was about a dozen miles and hard work, without the benefits of today's machinery. He did it with one son starting with a crew at one end and other son with a crew at the other. They worked towards each other with their sisters keeping them fed.

"There is also a family tradition that he was involved in building the lighthouse at Neist Point. My grandfather, who carried on the work, died when I was two.

"My father did his building apprenticeship from 1947-52 when he was building council houses. But then he and his brother decided to go out on their own."

That was the birth of MacDonald Brothers & Co - "An uncle was the & Co'. They were mending roofs and adding extensions. Then they started making concrete blocks to replace the brick and rubble that was being used and were building houses, but only a few each year."

John MacDonald used to work in the firm, but only as a labourer in the summer when he was home from Glasgow University. But he had not gone south to learn more about building. When he wasn't playing shinty (he captained a highly successful university team and won a blue) he was studying electrical/electronic engineering.

"I was interested in physics at school and electrical circuitry, not bridge building. At any rate if you wanted a job in the early 1980s you didn't go in for civil engineering. Silicon valley was just growing and chips were seen as the future. They certainly were sexier than mixing concrete on a building site."

On graduating, he went to work for Shell Chemicals in Carrington, outside Manchester, which was making chemicals and polymers, starting as a measurement control engineer.

He spent 10 years with the multinational in five different jobs: from working in a giant steam-producing power station, to general engineering manager at a plant making polystyrene bead; then to plant design at head office in the Hague to managing a waste management facility at Stanlow Refinery in the Wirral.

In this last job he managed to save the company from spending £20m on a replacement plant to meet new 1996 European limits, by introducing a new operating regime. Yet it was the heavily layered management above him which was to get the kudos.

That was part of the reason he decided to leave in 1995. Another was a large programme of redundancy that he had to supervise. "My father wasn't getting any younger and I just decided that it was time to go home to Skye. I got a bit of a handshake, more silver than golden, and came back to MacDonald Brothers.

"At that time we were building four or five houses a year. But what they were being offered by the mainstream kit companies were pretty boring rectangles. When timber-frame started, you got the concrete tiles on the roof, big overhangs, suspended timber floors. That's what we were doing.

"I was increasingly conscious that these box bungalows simply did not sit well in the Skye landscape. But the traditional croft house sitting below a mountain with its pitched slated roof and dormer windows just looks right. I always liked things that were built to last in this environment.

"It was also noticeable that a lot of people coming up from the south wanted old houses or older-looking houses. That's why I set up Skye Homes, first as part of MacDonald Brothers then three years ago as a standalone company when I left MacDonald Brothers."

He found an architect and a sales director and set up in the old Bank of Scotland's back house in Portree. A website and Skye Homes were up and running as a separate entity, offering timber frames to a traditional design.

"They were originally being manufactured by a larger supplier for economies of scale; however I wanted to ensure that we had total control of product quality and service. So we ended up manufacturing the kits ourselves here on Skye.

"If you are thinking about a house, you come and see us or talk to us online and we go through the different designs and tailor them to what you are after, holding your hand all the way. We then price your design and make the kit for it. Then we can help you find a builder or you build it yourself."

Inquiries began to flood in from all over the country, from Shetland and Lewis down into Argyll, where demand is particularly strong. "We actually now have one in the New Forest and one in Wales, and two or three from Cornwall and Devon are now at planning application stage."

At one point the website was getting 1000 hits a month. "It is probably down to about half that now, but at the moment we are producing about 50 kits a year, which still demonstrates the enormous interest in self-build."

This brings us neatly back to his cunning plan to lead the industry out of the present doldrums.