Only HSBC will lend on concrete flat

larsony

I would really appreciate any advice on this one. My girlfriend and I - first-time buyers - have seen a flat in the N1 area of London that we reallly like. Our budget is around the £250,000 mark and we want two bedrooms. Because of the area this means we are restricted to ex-council houses.
The flat we've found is priced at £255,000, it's got two floors, THREE bedrooms and has two balconies with great views over the city.

Take a look for yourself ... http://www.findaproperty.com/displayprop.aspx?edid=00&salerent=0&pid=239032&agentid=02540

We've been told by the estate agent and London and Country mortgage brokers that the only lender who will lend on this is the HSBC.

The estate agent has indicated that the seller will accept no less than £250,000 and his fees paid - a total of £3,950. He's already rejected an offer of just £250,000.

The agent mentioned that this £4K would be a 'gentleman's agreement'. Now I know all about the stamp duty rules and, if we buy, we're probably planning to simply declare to IR the cost of the property including the fees - thereby leaving us liable for the 3% tax.

Obviously as it is concrete build and because of the strict rules from lenders, we plan to get a full survey carried out before buying, however I have several concerns/questions.

1. How much can we expect to lose if a surveyor carries out a survey and either the HSBC turn around and withdraw their offer of a mortgage or it turns out there is a fundamental problem (such as concrete cancer) or both?

2. As I am self-employed we are relying on my girlfriend's salary for a mortgage of £100,000. I am using money from the sale of an inherited property to raise the rest. I am planning to go back to full-time work in the New Year. Once I get a full contract I will want to re-mortgage and release that money for other investments. Does anyone think I might struggle to release this money given the nature of the building?

3. The nice guy from London and Country who said he couldn't find us a lender said we should beware that this will make things difficult when we come to sell and that the property is unlikely to rise quickly in value. Can anyone comment on this.

Obviously there are pros ... we get to live in what seems to be a really nice flat, and cons ... we're stuck with one lender and it might take longer to sell.

What would the sensible flat-buyer do in this situation?

silvercar

What would the sensible flat-buyer do in this situation?

Find another flat!

You have two problems.

Firstly, when you sell, your buyers will only be able to get a mortgage with HSBC. This severly limits your market to those buyers whose finances fit in with the lender's conditions. It also means anyone tied into a mortgage with another lender (eg by redemption penalties) would not be able to transfer their mortgage to your property. It will also put buyers off as their potential to sell is limited.

Secondly, selling will be difficult at anything over this £250k mark until the price rose to £265k+. Due to the stamp duty regime properties valued at £250-£265k are difficult to sell.

Making yourself liable for 3% stamp duty is costing you an extra 2% ie £5,000!

AndrewSmith

The sensible flat buyer would walk away

oldMcDonald

ditto the above.

having in the past owned a concrete house within an estate that only the halifax would lend on, I would not advise anyone else to consider something similar. Originally many lenders lent on these houses, but pulled out one by one due to the construction and the prices plummeted. The average price of a 3bed here is around 150k, these houses asking price is around 95k, 70k if the mortgage isn't a Halifax one.

It took ages to sell our old house, It was cheap enough to attract many buyers and it took seven mortgage applications by prospective buyers before we could sell. If prices go down I can't imagine what these houses would be worth.

If I were you I would stear clear.

lynzpower

personally I wouldnt bother either looks like a lot of grief for what it is.

lynzpower

what about this one
http://www.rightmove.co.uk/viewdetails-6224010.rsp?pa_n=3&tr_t=buy

this
http://www.rightmove.co.uk/viewdetails-6224010.rsp?pa_n=3&tr_t=buy

this
http://www.rightmove.co.uk/viewdetails-11943098.rsp?pa_n=2&tr_t=buy

this
http://www.rightmove.co.uk/viewdetails-5599953.rsp?pa_n=3&tr_t=buy

this
http://www.rightmove.co.uk/viewdetails-5686941.rsp?pa_n=3&tr_t=buy

i was quite surprised what there is - one is e2 here but the others are ec1 or n1

all well under your 250 budget

lynzpower

or this! http://www.rightmove.co.uk/viewdetails-5706312.rsp?pa_n=4&tr_t=buy kitchen heaven, 2 beds, in N1 -235

Leon_W

Really have to agree with all that has been said above really.

There are many problems that can occur with these sort of propositions, my main concern would be that if the only lender who is prepared to consider it (HSBC) get their fingers burnt badly on similar deals, then they could possibly withdraw from that particular market, as have all the other lenders.

That could leave you with one serious liability.

sm9ai

Agree with everyone else. Why make things difficult for yourselves and give yourself more problems in the future.

Also if your restricted to one lender then the interest rate is probably not that good. It may seem cheaper than others but in the long run its probably not.

larsony

Thanks all - confirmed all my worst suspicions. I'd suppressed them because we were taken with the flat but it looks like a really bad deal.

Ta!

Doozergirl

Yep. I was thinking about answering all your questions but then just thought - walk away.

The only person buying this will be probably be a professional investor who can afford to keep it very long term if the rent stacks up. The flat should probably go to auction, IMO.

I would be happier living a bit further out of town knowing I could actually sell my house on! The future value of this one would always be in doubt.