BuildLoan, the intermediary arm of self-build specialist BuildStore Financial Services, believes Virgin Money has “missed out on a vital opportunity” by pulling out of the self-build sector.
Last week the lender pulled out of the sector, citing a lack of demand for its product.
At the time, a spokesman said: “There was a limited demand for the product so we decided to withdraw it. It only ever made a very small fraction of our lending.”
Previously, Virgin would not release funds on the land only but would release stage payments, which would be paid when the property was wind and weather tight, plastered and then completed.
BuildLoan says that because of the staged payment nature of its product “it is not surprising that they have seen very little demand from self-builders”.
BuildLoan associate director Nigel Payne says: “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.”
Other lenders that will lend on self-build properties include BM Solutions and a series of smaller building societies like Saffron, Melton Mowbray, Scottish Building Society and Progressive Building Society.
Last month, Mortgage Strategy revealed that an all-party parliamentary group for self-build, led by Richard Bacon MP, is exploring whether it is possible to include self-build projects within the mortgage indemnity Help to Buy scheme in order to increase the number of houses built.
Lending to the self-build sector fell from £2.63bn in 2007 to £790m by 2011 – a drop of almost 70 per cent – according to a Lloyds Banking Group and University of York report published last month. However, the Government is attempting to boost the number size of the market.