Mortgage declined because of "student area"

WestonDave

JWest wrote: »

Not any more. There is some relatively recent law/regulation (I don't know the exact details) that makes it difficult to repurpose a house into being let "under multiple occupation" (i.e. to students rather than a family) unless it's being let that way already.

I can see that this might somewhat reduce the price of houses in these type of areas, but at the end of the day no more than 25% or so of the houses in the area are student lets. Have the other 75% of the houses in these areas somehow become worthless overnight?

I think you've got an article 4 planning restriction - we've had one introduced into an area of Bath that was getting overrun with student HMO's. Now you have to apply for permission to convert and the assumption is that it will be refused. Locally a high profile case went to committee where the owner occupier wanted to get permission to convert on the basis that there were so few houses left on his street that the only way he could get a good price would be if he got HMO permission. Got refused.


I'd advise you do some research - see what houses like yours were going for before the restriction and what you are likely to be paying now. Potentially being able to demonstrate that the price reduction from not being able to sell as a HMO property has already taken effect and then being able to argue that the article 4 restriction should prevent that situation getting worse may help your case. It may be an issue that lenders haven't yet fully come to understand so they will need some help.

ACG

Im in manchester and have done a few residential mortgages in student areas of manchester and liverpool - recently!

It seems odd they are declining based on that. Surely if there is a demand there from someone then it has a resale value. Landlords will no doubt always want those properties.

It sounds like your broker just cant be a...d giving it another try. I would speak to some lenders - smaller ones if necessary and send over a photo/google maps link of the street and get a decision on the property before applying. Im sure there will be lenders for it.

Not that it helps a lot but I recently did a Mortgage in NG10 which I dont think is a million miles away and that went through without any issues.

JWest

WestonDave wrote: »

I think you've got an article 4 planning restriction - we've had one introduced into an area of Bath that was getting overrun with student HMO's.

Yes, that does sound like exactly what's going on here.

WestonDave wrote: »

I'd advise you do some research - see what houses like yours were going for before the restriction and what you are likely to be paying now.

I've already looked into it and I'm fairly sure the price we're offering is already significantly reduced over what we would have been looking at before the restriction. The owner has significantly reduced the price from what she was initially looking for. It's tricky to tell for sure though, as the property itself is somewhat unique, so there's nothing quite like it in the area to make a direct comparison.

cinnamon442

We had a mortgage declined because there was a curry house up the road. Even though you couldn't smell anything, there were no nightclubs or pubs nearby and they weren't open half the time. Lenders refuse for stupid reasons sometimes.

We changed broker, found one that wouldn't take no for an answer and bought another house, also with a curry house down the road. Change broker and see what they advise, they might be able to open some doors for you.

JWest

ACG wrote: »

It seems odd they are declining based on that. Surely if there is a demand there from someone then it has a resale value. Landlords will no doubt always want those properties.

Sadly there's a restriction in place for the area, meaning the property can't be converted to a student let. I can understand that this might decrease demand to some degree, but I think our offer price has already taken into this into account. Besides, when we're only after such a small loan, I can't see why they've got a problem.

ACG wrote: »

It sounds like your broker just cant be a...d giving it another try. I would speak to some lenders

To be fair to the broker, he's not refused to find us another lender, just indicated that it's going to be trickier as most "high-street lenders" (his words) are likely to have the same reaction. He's looking into finding a smaller lender for us at the moment, I'm just concerned that these might have much higher rates. Mostly I'm just confused why any of this is an issue to our first choice of lender.

ACG

Saleability is the biggest issue to any lender after affordability.
If there is a restriction (I wasnt aware that was the case on your first post) then it is going to be a problem.

Smaller lenders are not necessarily more - infact, they can quite often be less... although that might not be the case in this situation. But all lenders have a pot of money they NEED to lend out in order to make a profit. So they are not going to be charging 10% when the rest of the market is around 3% as nobody would touch them otherwise.

See what your broker comes back with. If it is going to be an issue then you should be thinking about whether or not you want to be stuck with that property. I know it might not be on the cards, but if you have kids etc you might want somewhere bigger and struggle to sell. Likewise if it is a student area, all night parties/freshers weeks for the next however many years? - sounds perfect for me as im in my 20s but when I come to settle down it would bea nightmare and I would become victor meldrew overnight.

Also house robberies/muggings are usually more frequent in those areas.

bris

Brokers have preferred lenders, some have exclusive contracts with certain lenders who they deal with, change broker and they will introduce you to a different range of lenders. Whilst some will not lend, there are plenty who will.

JWest

ACG wrote: »

If it is going to be an issue then you should be thinking about whether or not you want to be stuck with that property.

That is the other thing on my mind, certainly. We love the house, and we have no plans to move again in the foreseeable future. But I still don't want to be lumbered with a property we're going to have a nightmare selling, since we never know when we might need to move unexpectedly.

As a first-time buyers, it's a nightmare trying to work out if the price we've offered is reasonable under these circumstances, or whether we're being foolish due to liking the place so much. The lender coming back with this decision has added to my worry that it's the latter.

trailingspouse

Let me get this straight - the restrictions mean landlords can't buy places for students to live in. And those restrictions also mean that non-students can't buy the places.

Students can't live there. Non-students can't live there. There aren't many people left...

JWest

trailingspouse wrote: »

Let me get this straight - the restrictions mean landlords can't buy places for students to live in. And those restrictions also mean that non-students can't buy the places.

That seems to be about the size of it, yes! It seems entirely ridiculous. But if the mortgage companies are going to make it this difficult to buy a house in this kind of area, heaven knows how anyone's going to get a mortgage when we come to sell...