MortgagesJan 20 2015

Lloyds joins Capita in home building scheme

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Lloyds joins Capita in home building scheme

Lloyds Banking Group and Capita Asset Services have launched a scheme that will enable more people to build or customise their own homes, while also helping local authorities with land to develop.

Designed to de-risk the process of obtaining mortgages for self-built and custom-built properties, it allows councils to both attract buyers and retain control over new developments until completed.

Based on the existing ‘Custom and Self Build’ local authority mortgage scheme, which has already been used by 100 local authorities, the new project will see 11 local authorities working with local developers and relaxed planning regulations to create new homes.

Cecilie Booth, director at Capita Asset Services, said that for those wishing to build their own homes, access to mortgages has always been a challenge because lenders, not unreasonably, insist on staged payments.

“For local authorities, either those leading developments or with land to develop, this scheme reduces risk and guarantees that buyers will have agreed finance in place.”

Under the scheme, individuals wishing to self-build or custom-build a home in one of the participating local authority areas will apply for a mortgage and, once agreed, the deposit, for as little as five per cent, will be paid direct to the local authority.

The local authority will fund the cost of the build to completion at which point, the mortgage will be provided by the lender, covering the build costs, which will be fully repaid to the local authority. Once the house has been built, homeowners will simply have a mortgage on a custom or self-built property.

Stephen Noakes, mortgage director at Lloyds Banking Group, the first lender to take part in the scheme, said: “Improving the supply of housing across the country is crucial for maintaining a sustainable market, and this scheme will increase the options available for those looking for a new house.”

Eamonn Colman, affordable solutions director for estate agency group Countrywide, added that exploring innovations that sustainably help to increase supply into the market is crucial in order to help meet current levels of demand.

peter.walker@ft.com