MortgagesJun 20 2013

Rosy future for self-build: NaSBA

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The chairman of the National Self Build Association said Virgin’s exit, announced last week, could see it miss out on the benefits of significant policy changes designed to increase the number of self-built homes.

The bank offered staged payments for homes under construction that were wind and weather proof, or plastered, as a legacy of predecessor Northern Rock’s product range.

It decided to pull out of the sector last week, citing a lack of demand. A spokesman said its mortgages were not “full” self-build products, but variants of standard mortgage products with more flexible criteria.

Mr Stevens said: “Without sounding too churlish, Virgin was only a small player in this space anyway. Lloyds is by far and away the dominant lender, but Virgin may have exited the market too soon.

“There are twice as many lenders offering self-build mortgages now than there were two years ago.”

The government has called it a priority area where it wants to see a significant rise in the number of self-built houses in the next couple of years, from just 5 per cent of all homes in England at the moment to higher than 25 per cent in the next few years.

He added: “To enable this growth, planning rules are being relaxed, more building plots are being made available and council demands for infrastructure payments are being abolished.

“There is a huge demand for self-build homes so the picture is rosier than people think.”

A spokesman for Virgin Money said it would continue to review the self-build market as conditions changed.

Industry View

John Hall, chief executive of Saffron Building Society, said: “It’s a shame that Virgin Money has decided to turn its back on the UK’s self-builders. It has presumably decided this because it is not a mass market but it is nonetheless an important sector.

“There is a real danger that large lenders simply target mass mortgage markets and in so doing create real problems for borrowers facing special situations.”

Adviser View

Derek Gair, partner of Hampshire-based GDC Associates, said: “In my experience self-build has always been a niche market and will continue to be. I can’t remember the last self-build mortgage I did, but it is also important to remember that there are other options such as development funds available to self-build customers.”