Virgin Money withdraws from self-build
The bank did not have a pure self-build product whereby borrowers could apply for funds secured on land to be built on but made stage payment options available to customers.
A spokesman for the bank said: “There was limited demand for this product so therefore we decided to withdraw it.”
Funds will now only be released when a property is habitable and will require an acceptable new build warranty or professional consultant certificate as proof.
The decision to withdraw the self-build option follows housing minister Mark Prisk’s recent drive to promote self-build as a viable route for people to get onto the housing ladder.
Speaking at the launch of its report in May , Build it yourself, Stephen Noakes, mortgage director of Lloyds Banking Group and deputy chairman of the of the Council of Mortgage Lenders, said he would be opening discussion to members of the CML in a bid to get more lenders involved with self-build.
Jon 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. There are approximately 11,000 new homes self-built each year which accounts for 7% of new housing stock and 26% of all new detached homes.
“The value of self-build to the construction market is £2.3bn meaning that it makes an important contribution to economic recovery which is why the government is keen to support self-builders by giving them exemption from the new Community Infrastructure Levy.
“Virgin has presumably decided to abandon self-build because it is not a mass-market but it is nonetheless an important sector which is why Saffron Building Society is continuing to support it. 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.
“I believe it’s important that lenders continue to support valid markets such as self-build.”
Raymond Connor, chief executive of BuildStore Financial Services, said: “We are disappointed with Virgin Money’s decision to withdraw from self-build lending but given the limited nature of its product, only lending and releasing funds once the property is wind and watertight which is a relatively late stage of the build, it is not surprising that it has seen very little demand from self builders.
“Its especially disappointing as BuildStore had approached Virgin Money to discuss how it could better meet the financial needs of self builders, and if approached in a more constructive way, it could easily have been doing £100m in self-build lending every year, funding hundreds of new homes.”
Nigel Payne, associate director of BuildLoan, BuildStore’s intermediary division, said: “With the right product Virgin Money could have been a perfect brand for the intermediary self build lending market and with our broker enquiries and mortgage approvals increasing every month it has missed out on a vital opportunity to help support a growing market.”