What to do? Surveys, and Reinforced Concrete Frame

jonfreedman

GAARGH!  Having just shelled out hundreds of pounds on surveys and conveyancing for a beautifully re-decorated 1950s ex-local authority flat, the mortgage lenders (Scottish Widows) have just come back to us and said they won't lend for this property, as it was built with a 'reinforced concrete frame'.

Our IFA has asked around a few other high street lenders, to see what their policy is, and if they will lend to us.  Abbey said they do not have a blanket ban on reinforced concrete frames, it depends on the result of their own survey.   If there are no major defects in the building, they will give us a loan.

The question is, if the Abbey says they will lend to us, is it worth the risk, or will we potentially end up buying a flat that we can never sell on, since future buyers will have just as much trouble arranging a mortgage?

What do people think?  Has anyone had similar experiences?

trafalgar_2

In my opinion ,you will have less potential buyers in the future,as you have said yourself ,you got turned down by your first lender because of it so it stands to reason the potential is there for future buyers to have problems too

It doesn't mean you won't be able to sell it though , just a prospect of a smaller market :-/

sshnuke

entirely agree with trafalgar...

if you really want to consider buying it:

go back to the surveryor. you've paid a handsome sum for the survey so get as much info as possible. they may even be able to help answer your query further re: prospective purchasers.

do the abbey mean their own valuation report or you doing another full homebuyers survey? this is really a cost issue. i suspect it is a valuation report in which case it makes sense to go ahead and see if abbey are willing to invest in the property.

not much consolation... but the money you forked out on the survey is really a win, win situation. at least you know what you're buying into and if you decide not to buy, the £££ you spent may save you £££££ & lots of handwringing in the future.

not the same problem but a few points raised which echo comments here that you may find helpful: http://forum.moneysavingexpert.com/cgi-bin/yabb/YaBB.cgi?board=Property;action=display;num=1101418980

System

Firstly pat yourself on the back for doing the sensible thing and getting a survey done, which has identified a serious problem.

As you have found, most building societies are loath to lend on the property. One of the reasons is because they are concerned that if they repossessed the property at some point in the future, they would not be able to sell it at a price to cover the outstanding mortgage.

The question I would be asking, if a multi-billion pound organisation doesn't want to take a gamble with it, do I?

What if you wish to remortgage, you will have a very limited pool of lenders to choose from, if any at all in 5 or 10 years.

Finally, it might not just be a question of not being able to sell the property in the future, but the ongoing repair work that may become necessary.

If you do decide to take the gamble, then the price needs to reflect that gamble. You obviously thought that the property was a reasonable price before you got a survey done. With this problem, is it worth that now or considerably less?

If it was me, I would be running not walking away, and thanking my lucky stars for a close escape.

malcolmord

Dont buy it - loads of lenders refuse to cover this style of property.  Unless this is reflected in the asking price they'll probably have to put the house to auction when they want to sell it - cash buyer only...  Spoke to a chartered surveyor about this who does mortgage surveys for the building societies - she says you'll have huge probs selling it on...

jonfreedman

Thanks for the advice.

Had a useful chat with my IFA and the Surveyor who looked at the property. According to IFA, at least 2 big lenders - Halifax and Abbey will lend on properties with reinforced concrete frames, provided they do not find any problems with their own basic valuation.

Surveyor said that he found the property was in reasonable condition. He found no evidence that the concrete frame was causing any problems with the building. He also said that he sees properties like this every day, it is extremely common. Even though Surveyors are reluctant to ever say anything is "good" or "fine", just in case they are wrong, at they get sued, he did say that he was trying to do his best to reassure me about the property.

So we have decided to ask the Abbey to do their basic valuation. If they say yes, then we are back on!

sshnuke

to save yourself lot's of handringing in the future make sure you heed the words of warning given by others before.

also....

while you're waiting for the valuation to be done it's a really good idea to visit the property with a friend who has a critical eye. if your first visit was in the day then make the other visit in the evening e.g noisy neighbours, thin walls etc.

the best piece of advice i can give is also the most difficult... stand back and look at the property with a much more critical eye.

btw... though it's been mentioned that building societies do not invest in this type of property, in my experience the halifax and the abbey are far more flexible with most things. however, it's still a good idea to ask how long the property has been on the market. this should give you a guide

deemy2004

There usually the last to rise in price and first to fall

again be afraid, very afraid !

jonfreedman

Firstly pat yourself on the back for doing the sensible thing and getting a survey done, which has identified a serious problem.

The survey didn't identify a serious problem. These buildings can have problems, but this one actually doesn't. Unfortunately, Scottish Widows have a strict blanket policy on this issue, which doesn't take into account the condition of the property. Their approach is 'just say no'. Some reputable lenders will lend on it, some don't. If we had gone with the abbey in the first place, this would never have been an issue, even after the survey.

it might not just be a question of not being able to sell the property in the future, but the ongoing repair work that may become necessary.

Again, there is nothing wrong with the place at the moment. The Surveyor said it is 50 years old. Things can go wrong and need repairing with 50 year old properties, but chances are, if we don't buy this place, we'll end up with another property just as old, or older, and there will be potential for expensive repair work to that one as well.

If you do decide to take the gamble, then the price needs to reflect that gamble. You obviously thought that the property was a reasonable price before you got a survey done. With this problem, is it worth that now or considerably less?

The survey agreed that the price we are paying is reasonable for what it is.

Thanks everyone for your concern. Also - to the person who suggested looking at it with a critical eye, and going back at different times of the day, with friends to say what they think, we have done that, 3 times, and everyone thought it was stunning.

Someone else advised me about the value of ex-local authority houses, first to fall, last to rise in value. That may be so, but another piece of advice the surveyor gave is that for an ex-local authority, it is in very good condition inside and out, and in an excellent location. So as these sort of flats go, it is a desirable one (and perhaps less susceptible to the sort of variations in value quoted above).

Thanks again for your concern, but all things considered, the risk we are taking with this flat does not seem any more serious than that which we would be taking with any other similarly aged property.

sshnuke

i'm so very pleased that you took my advice without me having to labour on about it... which i was very tempted to do. in the past i have had to try and advise eager & enthusiastic homebuyers to try and be as objective as possible... it always dampens their spirits and bursting their bubble isn't that easy to do. thankfully they were always grateful and i'm certainly pleased that you appreciated the same advice.

good luck.