The government will work with mortgage lenders to make sure they increase custom build activity, as detailed in its housing white paper Fixing our broken housing market.
It said demand for the tenure is on the rise, while the homes themselves are higher quality and less risky for builders than regular homes, since they are sold before they are built.
The housing white paper read: “Fewer homes are custom built in England than many other countries, but there is evidence of more demand for them including from older people.
“We will… work with lenders to ensure they have plans in place to increase their lending in line with consumer demand.
“We are delighted that Virgin Money plans to start lending on custom build projects in the summer.”
The government also pledged to support custom build by promoting access to Right to Build, which was introduced in October and made it so planning authorities have to find land for those seeking a custom build home in their area.
Meanwhile it vowed to continue supporting the tenure though through its Accelerated Construction programme introduced at the same time and said it would consider reforming developer taxes.
Lastly the government warned it would “consider taking further action including possible changes to legislation” if local authorities don’t promote custom and self-build enough.
Jayne-Anne Gadhia, chief executive of Virgin Money, said: “We are particularly keen to support the increased role of shared ownership, starter homes and custom build, which will not only contribute to supply, but also ensure that new homes meet people’s specific needs.”