With a bit of playing around I've managed to come up with a semi solution (not perfect but good enough)

using 2707974 answer and information I've gained else where I've been able to get what I need.

First you need vsftp and PAM installed

apt-get install vsftpd libpam-pwdfile

Edit /etc/vsftpd.conf

nano /etc/vsftpd.conf

then paste in the following

listen=YES

anonymous_enable=NO

local_enable=YES

write_enable=YES

local_umask=022

local_root=/var/www

chroot_local_user=YES

allow_writeable_chroot=YES

hide_ids=YES



#virutal user settings

user_config_dir=/etc/vsftpd_user_conf

guest_enable=YES

virtual_use_local_privs=YES

pam_service_name=vsftpd

nopriv_user=vsftpd

guest_username=vsftpd

Edit to your exact needs the most important bit for virtual users is everything after the virtual user settings comment

Creating User

You can either use a database or htpasswd I found htpasswd faster and easier to use.

make a directory to store your users

mkdir /etc/vsftpd

htpasswd -cd /etc/vsftpd/ftpd.passwd user1

adding additional users just omit the -c

htpasswd -d /etc/vsftpd/ftpd.passwd user2

I've only managed to get it to work using CRYPT which limits to 8 chars
to use more than 8 chars use openssl to generate a compatible hash and pipe directly into htpasswd

htpasswd -c -p -b /etc/vsftpd/ftpd.passwd user1 $(openssl passwd -1 -noverify password)

Once your users are created you can now change your PAM config file

nano /etc/pam.d/vsftpd

and remove everything inside this file and replace with the following

auth required pam_pwdfile.so pwdfile /etc/vsftpd/ftpd.passwd

account required pam_permit.so

This will enable login for your virtual users defined in /etc/vsftpd/ftpd.passwd and will disable local users

Next we need to add a user for these virtual users to use. These users will not have access to the shell and will be called vsftpd

useradd --home /home/vsftpd --gid nogroup -m --shell /bin/false vsftpd

the user must match guest_username=vsftpd in the vsftpd conf file

Defining Directory Access

The important line here is the following

user_config_dir=/etc/vsftpd_user_conf

this means that when user1 logs in it will look for the following file

/etc/vsftpd_user_conf/user1

this file the same as the vsftpd.conf so you can define a new local_root

going back to the question we want user1 to only have access to var/www/website_name1/sub_folder1, so we need to create the vsftpd_user_conf folder:

mkdir /etc/vsftpd_user_conf

Now create the user file:

nano /etc/vsftpd_user_conf/user1

and enter the following line

local_root=/var/www/website_name1/sub_folder1

Now restart vsftp

service vsftpd restart

you should now be able to login as user1 who will only be able to see
var/www/website_name1/sub_folder1 and any folder and file inside it.

That's it you can now add as many users as you want and limit their access to whatever folder you wish.

important to remember if you do not create a user conf file it will default to the var/www folder as root (in the example above)

If the subfolder is intended to be modifiable by the user, it might be necesary to change the owner of the shared subfolder:

chown vsftpd:nogroup /var/www/website_name1/sub_folder1