Mortgage Rejected - 'Not Suitable Security'

stefs4

Hi, I'm a FTB and had an offer accepted on a flat in Zone 2 East London. An area I'd consider to be continuously going up in average prices.

I passed all the affordability tests and my solicitors have just gotten started on paperwork. Everything was going well until my L&C broker rang me to say that the lender's (Halifax) surveyor deemed the property 'not suitable security', without physically visiting the property.

It is a private block of residential flats that has a price that falls within the E2 average pricing (according to the house price index and Zoopla). My broker said he'd check with Santander's surveying company to see if they say the same.

He also said that Halifax (part of Lloyds Group) is one of the big 3 lenders in the UK, and if the Santander's surveyor says the same thing, it's a bad sign in the future for remortgaging or reselling, and that I should consider withdrawing.

I find this very puzzling as it's an in-demand part of London in a private residential block. I can't think of why it's not deemed suitable, especially without even visiting the property.

Has anyone ever encountered this kind of situation before? If so, how would you proceed? Do I take my broker's advice and pull out if the other surveyor says the same thing?

It's all very stressful, and to be honest, quite demoralising!

glosoli

Could be any number of different reasons, do you have a link to the property in question so we could hazard a guess?

eddddy

There are certain types of properties that the big lenders won't lend on, including...

High Rise
Studios under 30 square metres
Above licenced premises

Specifically for Halifax/Lloyds, there's a few more clues here: http://www.colleys.co.uk/help-support/frequently-asked-questions/

But you should try to find out the precise reason.

TBH, it's a bit naff that your mortgage broker didn't advise you about these types of things in advance.


... Although it could be that the valuation firm visited the property recently (for a previous sale that fell through), so they know there is no point visiting it again.

stefs4

Thanks for your replies. I queried the high-rise situation but it seems big lenders are quite lenient when they're in London and under 20 floors. The Studio and (I think) Licensed premises don't really apply to this situation either.

I had also scanned through that Colley's list this morning as they are the surveyors rejecting the property - but again it's all assumptions. My broker said there's nothing else they'll say apart from not being suitable for security...

I just find it bizarre that the decision was made without even visiting the property. I'm really not sure if this is a sign to pull out or if it's just a red herring.

I can't seem to post links - but here's a listing of a different property in the building. Remove DOT and spaces.
purplebricksDOTcom /property-for-sale/ 2-bedroom-apartment-london-202484

davidmcn

https://www.purplebricks.co.uk/property-for-sale/2-bedroom-apartment-london-202484

Yes, it's an ex-local authority high rise block. They are (largely) unmortgageable. I'm not aware of there being much more leniency in London but maybe that's true.

(plus it has commercial premises on the ground floor, which tends to be another red flag, so maybe it's the combination of the two)

stefs4

How do you know if it's ex-local? From what I've found, it's privately-run and has been for quite some time.

eddddy

stefs4 wrote: »

I queried the high-rise situation but it seems big lenders are quite lenient when they're in London and under 20 floors.

I'm no expert on mortgages, but perhaps 20 stories is OK in prime areas of London.

But I'm not sure that Bethnal Green is really prime. Mortgage lenders might worry about resale, if they have to repossess at the same time as there's a downturn in the market.

Google streetview kind of reinforces that - it shows graffiti on the shutters of the ground floor of the building.

Is your mortgage broker based in London? Do they know which areas are prime etc?

stefs4

My broker is L&C, which is basically 'remote'. My agents are based up north so may not have as much knowledge of London as a London-based broker. They're very nice and very helpful, but I'm wondering if there would've been a difference going with a local broker....

I personally would say Bethnal Green is very in-demand considering it's zone 2, on the Central Line, and 10 mins walk to Shoreditch, London Fields and Hackney. It's pretty much doubled in value in the last 5 years.

eddddy

stefs4 wrote: »

I personally would say Bethnal Green is very in-demand considering it's zone 2, on the Central Line, and 10 mins walk to Shoreditch, London Fields and Hackney. It's pretty much doubled in value in the last 5 years.

Yes, I agree with you. It's a great area.

In your position, I'd try phoning a few local Mortgage Brokers who might know the block, and ask their opinion.

Local EAs will also know the block and who/will won't lend on it - based on past sales experience. It's a shame you have a remote EA.

(I'm sometimes amazed how much info local EAs gather/remember about blocks of flats. The leaseholders, the freeholders, the mortgage lenders used, the solicitors used, plus loads of 'strange' anecdotes etc.)

davidmcn

stefs4 wrote: »

How do you know if it's ex-local?

It looks like one and quacks like one. Here you go:

http://www.towerblock.eca.ed.ac.uk/development/bacton-street

50 Roman Road Freehold Limited was incorporated in 2005 so it appears to have been out of council hands since at least then.

stefs4

Woah - I searched all over the internet and found little to no info on this building. Thanks for shining a light on this!

However, since it's now totally private - does being ex-council really have an impact anymore?