Grant Shapps, the housing minister, is calling on the UK’s biggest mortgage lenders to back a self-build revolution by lending more to those who aspire to build their own home.
In a letter sent to key players in the mortgage market, he says he wants self-build housing to become much more common in order to generate more supply of affordable homes.
Shapps wants lenders to make more specialist mortgage products available for self builders in order to make this happen.
He says lenders perceive self-build as a risky market but high interest rates on such products make it attractive to lenders and it is an opportunity for them to tap into a new market.
Shapps is encouraging lenders to make more widespread use of indemnity insurance and build out cover to mitigate the risks of self-build projects being left uncompleted.
The Department for Communities and Local Government says Shapps’ letter is part of the government’s programme to encourage growth in the self-build sector, as the UK has one of the smallest proportions of self builders in Europe.
But while Shapps says the government will play its part in achieving this aim, he argues that the future growth of the sector depends on lenders themselves backing the country’s aspiring builders.
He says: “Self builders deliver affordable, greener and more innovatively-designed homes and make a big contribution to the number of new homes built in this country, yet there is scope to significantly increase the number of self-built homes in the UK.
“I want to create a self-build revolution where building your own home is not just the preserve of the privileged few and as the mortgage market continues its recovery, lenders have an ideal opportunity to diversity lending into areas such as this.
“With expert knowledge from established intermediaries, lenders can make a profit at low risk.”
Shapps adds that he believes there to be real business opportunities for lenders in this sector and he is calling on them to make it more mainstream.
Martin Bell, head of customer lending at Norwich and Peterborough Building Society, says the mutual is proud to offer self-build mortgages.
He says: “Building your own home could make perfect financial sense for very many people, and we welcome Shapps’ promotion of the self-build sector, highlighting the possibilities that are out there.”