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Finding a lender for a property near a pub(!)
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# 1
rememberthis
Old 09-12-2012, 5:57 PM
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Default Finding a lender for a property near a pub(!)

Hi all

I'm in a pickle, I've found the perfect property for me, spoken to the bank and secured a mortgage promise after showing them the property I want to buy.

My offer was accepted, survey is fine and solicitors instructed.

Now the valuer from Halifax has looked at the property and decided that for a number of reasons he is not willing to put a resale value on it, meaning the Halifax will no longer lend on that particular property.

The main issues were;

1. It's considered to be a freehold flat (it's actually a whole building with the upstairs converted into an apartment, I would own the entire building so wouldn't be faced with the normal problems of owning a freehold flat. The valuer accepted this however said he did not have a tick box in his guidelines to get around it!)

2. It's behind a pub.

I've spoken to an independent broker who is currently trying to find another lender, and I'm happy that there are lenders out there who will acknowledge that I'll own the whole building so the freehold element of the apartment wouldn't be an issue for them.

However I am very worried that I wont be able to find a lender who isn't put off by the fact that the property is behind a pub.

I was hoping there might be someone out there who would be able to suggest a lender who would be willing to lend against a property like this. I can't believe that there are no lenders for residential buildings that are near commercial ones - it just doesn't make sense. I can understand their point of view on the situation, but there has to be someone willing to lend against this building? The survey was good, the building is sound and it's large freehold building in the centre of a city - I can't believe a valuer would not put a value on it at all.

Any advice or suggestions would be great. A commercial mortgage isn't an option unfortunately. Thanks a lot!
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# 2
ACG
Old 09-12-2012, 6:03 PM
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Its not the lender, its the valuer.
Lenders tend to go off valuers comments and if the valuer isnt saying what you want then it can be difficult.
You can appeal the decision but that might not result in anything other than another valuation fee being charged.

You will probably need another lender that uses a different company to do their valuations. The last thing you want is to apply to a different lender and the same valuer turn up.
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# 3
rememberthis
Old 09-12-2012, 6:08 PM
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Thanks ACG. I did speak to my mortgage advisor about requesting a different valuer, but he said this wasn't possible - Halifax will only use Colleys, and they assign one valuer to the property so wouldn't even send a different guy from the same company round.

In fairness to my mortgage advisor he's been really helpful and spent a long time talking to both the valuer (who I also spoke with) and his manager, trying to get around it. But he had to admit to me that his hands were tied.

I was hoping maybe a more independent/fringe mortgage lender would look differently on it, but I just don't know enough of the mortgage market to know where to look for that special lender!

Luckily I have an independent broker looking into it for me so hopefully he will come back with some options, but from what I'm told and what I've read, there is a real reluctance across the board to lend on properties near pubs. Which is why I was hoping someone here might have had a similar experience but with some luck attached, and could point me in the direction of a lender worth speaking to.

Cheers!

Edited to add: I'm also trying to find out which lenders use Colleys and which lenders use different valuers as this will help my hunt for a potential lenderon this property. Any suggestions here would be great, thank you!

Last edited by rememberthis; 09-12-2012 at 6:29 PM.
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# 4
Dave Ham
Old 09-12-2012, 7:29 PM
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Hi there,

Firstly, get your valuation cost back from the Halifax. They were never going to lend on a freehold flat, so they wasted your money. They will refund this.

How close is the pub, be really specific please.

I actually think the freehold flat is a bigger challenge than the pub, depending upon proximity.

Downside is you just cannot check this in advance as pretty much all the lenders will say subject to valuer comments.

Do you really want to buy a place where it will be difficult to sell to anyone requiring a mortgage?

Not patronising with that question, just provoking further thought
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# 5
rememberthis
Old 09-12-2012, 7:40 PM
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Hi Dave, thanks for the comments, not patronising at all - I appreciate all feedback/ideas on something that is essentially a massive purchase for me.

My independent broker suggest I should be able to get a refund too so I'm relieved to have that backed up by someone else - thanks.

The property was once part of the pub and is being sold off as part of a deceased estate which belonged to the old landlord.

The property is a two storey building, the upper floor is not attached to anything (other than the downstairs!) and the downstairs is a big empty garage space. The end wall on the right side of the property is attached to the back wall of the covered smoking area behind the pub.

So the pub and the property are at right angles to each other and are on different streets, but do connect via that one section of wall, but only on the ground floor level. The property I am trying to buy is down a lane and the pub faces onto a main street of the city centre.

Hopefully that's given a better understanding of the set up. I appreciate the freehold flat situation is a difficult one, but aparently Woolwich, Scottish Widows and Natwest will all look at it as an individual case by case basis, and therefore take into account that I would own the entire building. However Natwest don't look favourably on the proximity to the pub, and I'm waiting to hear back from Woolwich (Scottish Widows may not be an option as they want a higher deposit which I don't currently have).

Thanks for your advice
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# 6
Dave Ham
Old 09-12-2012, 7:48 PM
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Sounds like your broker knows his onions, so looks like you are in safe hands.

I have seen situations like this get through Woolwich, although it is a bit hit and miss as also seen some declined.

Not as familiar with the other lenders in this sort of situation.

My gut feel is this may be too close to the pub for any surveyor...
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# 7
rememberthis
Old 09-12-2012, 8:07 PM
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That's really interesting. Although my other half has owned before, I'm a first time buyer and the pub never stood out to either of us as something that would prevent the mortgage from going through.

It's a big building in a very central location with what is effectively a detached apartment upstairs, and enough parking for 3 cars downstairs. So we saw these points as very appealing.

I guess it's just a waiting game with the independent broker now. Hopefully we can get a good idea as to where things stand in the next day or two - I've already put money into the purchase and I'm genuinely gutted with the news, so I'd rather know one way or another whether we have any hope at carrying on with the sale or not.

Thanks for your help
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# 8
GMS
Old 09-12-2012, 10:22 PM
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What Loan to Value are you looking for?

As the property is attached to the pub (if I read it right) I would not be too hopeful of a mortgage on this.
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# 9
rememberthis
Old 09-12-2012, 10:29 PM
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It's 90% LTV which I know is high, although the cost of the property itself is much lower than what the bank had agreed to lend me.

I'm not feeling optimistic at all right now. Are there any other avenues for the mortgage - alternatives to the traditional bank? I'm not talking loan sharks or anything(!) but maybe there's a different form of lending that someone could suggest? I'm really new to this so haven't got a clue, all I know is we desperately want this property so I'm willing to look at all options in order to fund the purchase. I don't have any equity/savings etc. elsewhere so I'm guessing that I really am facing a dead end here if the banks wont value the property?

Thanks in advance
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# 10
GMS
Old 09-12-2012, 10:32 PM
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I hope I am proven wrong but I will stick my neck out and say not a chance.

Sorry
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# 11
rememberthis
Old 09-12-2012, 10:35 PM
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Quote:
Originally Posted by GMS View Post
I hope I am proven wrong but I will stick my neck out and say not a chance.

Sorry
I appreciate the advice either way, sometimes it's just gonna be bad news I guess. Just an absolute gutter.

I will keep the thread updated either way in the hope that maybe it'll help someone else manage their expectations in a similar situation in the future!
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# 12
GMS
Old 09-12-2012, 10:40 PM
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Attached to or near to commercial premises will restrict LTV for a start. Then the type of commercial comes in to play.

Pubs, take aways, late night convenience stores and the likes are frowned upon. Antique shops, post offices etc would be looked upon more favourably.

The property you have found is cheap for the reason(s) you are finding. The combination of problems is not something a lender would look to overcome at any LTV let alone 90%.

As mentioned earlier if you are having issues raising finance then you will have issues when you come to sell.

If something looks too good to be true it usually is.
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# 13
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Old 10-12-2012, 10:10 AM
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If you're wanting a mortgage on a pub, look for one with no lock-ins (sorry, couldn't resist)
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# 14
Goldiegirl
Old 10-12-2012, 2:50 PM
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I used to work for the Halifax - freehold flats were always a big no-no. I seem to remember there were cases where the buyer owned the whole building, a lease for the flat could be created, making the mortgaged property a leasehold flat. If you wanted to continue with another lender, this could be an avenue to explore.

With regard to the valuation fee, I'd question whether this would be refunded. The valuation has been done, so the fee has been spent. The valuer has to be paid, whether the mortgage proceeds or not. I'm guessing that the Halifax did not know that the property was a freehold flat until the valuer told them. When the application is keyed on to their systems, if the property was keyed as a freehold flat, the system wouldn't even let them instruct the valuer, it would be an automatic decline.

Even if the freehold/leasehold issue were resolved, there's the point about being near a pub. Flats near pubs/takeaways etc were never very popular, due to potential resale problems. There's potential for smells from cooking, noise and nuisance, all things to put buyers off
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Old 10-12-2012, 4:18 PM
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I'm with Goldiegirl on this. I really don't think you'll get a refund of the val fee. Why would you think you would ?

It's an interesting one though and I suppose everybody will have a different view. I can see where the freehold flat angle is coming in but is that any different to what some of the newbuilders around here are calling "coach houses", basically a flat above garages ?

The real killer will be that pub. With a lower LTV it might have been simpler but at 90% it's a bit of a risk too far lenders.
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# 16
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Old 10-12-2012, 4:58 PM
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This sounds more like a "coach house style property" who owns the parking/garage below? is that yours?

I think Coventry may consider this, but subject to vluers comments about the pub.
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# 17
Dave Ham
Old 10-12-2012, 7:26 PM
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The Mortgage Adviser at the Halifax should have checked. Say it was a leasehold and only had 55 years remaining, do you think the valuation would be refunded for this?

I worked at the bank in question in various roles and would have refunded for sure. The property did not fit criteria and the MA should have identified this.

I agree, open to debate but confident you will get the valuation refunded..

All the best
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# 18
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Old 10-12-2012, 8:08 PM
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I have never understood the issue regarding commercial use of attached properties, i.e property next door or above a commercial property.

Given the fact a mortgage is often over (say) 25 years, the use could change numerous times over that period. Today's pub (bad) could be tomorrows coffee shop (good?) or vice versa. With the rate pubs are closing at, it is even more likely that the property will no longer be a pub in (for example), 10 years time
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# 19
Goldiegirl
Old 10-12-2012, 8:10 PM
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If the MA is at fault, then yes, the valuation fee should be refunded.

But, at the mortgage interview, even if the right questions are asked, the applicant can give the wrong answer.

Often, problems with the lease are identified by the valuer, or by the solicitor. With the best will in the world, the MA, isn't at fault if they have been given the wrong information by the applicant.

I'm not saying this has happened in this case, but it did happen quite often.
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# 20
Dave Ham
Old 10-12-2012, 8:18 PM
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Agreed, goes without saying; if the OP has lied then no refund. If the MA has not asked the right questions or not listened to the answer then a refund should be provided
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