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Flats in concrete high-rise blocks

buy to let Feb 20, 2019

THE QUESTION

Has anyone managed to get a mortgage on an ex- local council concrete-built block?   I own a flat in one of these in London and I managed to get a mortgage when first purchased, but I am now struggling to remortgage it. 

THE ANSWER

Historically, lenders have had issues with lending on high rise ex-council concrete blocks.  It is less about which floor the actual flat is on and more about how many storeys in the block.

Most lenders bail out at anything above four storeys in total; a few are OK up to six storeys, but above six it has always been highly specialised and restricted lending.

To be clear it is not high-rise, per se, that lenders are opposed to.  21st century high-rise with up-to-date build quality is fine.  It is concrete council-built blocks from the 60's & 70's that is the problem.

It is not that they don’t sell because lenders don’t lend on them, it’s more complex than that.  Most underwriting comes down to one basic issue for lenders - if we have to repossess, how easy will it be to get our money back?

The perception lenders have (and this is on a main residence basis only, not BTL) is that flats in ex-council high-rise blocks are markedly less desirable to live in.  In addition, their view is that if the majority of flats in the block still have LA tenants living there, they will struggle to sell ithe flat and get their money back.

Lenders tend to go for broad brush underwriting criteria, as this speeds up the time their underwriters can underwrite loans in - so easier for a lender to say ‘we don’t lend on this type of flat full stop’.  Sometimes they might lend in one location but not in another.

You can assume Grenfell has lowered the desire to own and live in one of these flats substantially from an already low position compared to living in low-rise accommodation; re-enforcing lenders determination not to lend.

The BTL lenders previously willing to lend above six floors on these buildings were BM Solutions, Nat West and perhaps a commercial lender.  Even then, it was still subject to valuers comments and, if the valuer felt the demand to buy and live in a particular block was low, even these lenders would decline to lend.  Grenfell may have detrimentally affected even these lenders’ appetite to lend.

The easiest option is probably to be to stick with your current lender and just get a new deal from them.

 

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