Ex-local authority London flats - valuation failed

WorthyJ2000

Hello all,

I had an offer accepted on an ex-local authority flat in London. I applied for a mortgage with Nationwide through a broker with L&C. Nationwide accepted the application based on the information I supplied about the building but then the valuation failed due to the 'limited market-ability and sale-ability of the property'.

The flat is:
(supposed negatives for lenders)

• On the 9th floor of a 10 floor block.
• Ex-local authority
• The number of leaseholders in the block is 15% (from what I can see on the land registry.)

(supposed positives for lenders)

• It's had all regeneration works completed so no worries about cladding/roof/lift/balconies/wiring etc.
• It's got a lift
• Decent location next to a zone 2 tube station in East London.
• 65% LTV ratio

From researching online I knew that it might be a tricky property to get a property to get a mortgage on.

A lot of the flats I have been looking at are pretty similar to the one above.

• Should I give up on these types of flats as i'll never get a mortgage for them?
• Should I carry on trying for these kinds of flats but I've gone for the wrong lender?
• Should I switch to a local broker or will it not make any difference?

The only information from the valuation report is 'Limited market-ability and sale-ability'. I had thought: if i think it's ok/daft enough to buy something then surely someone else would be.

Any advice/thoughts would be very welcome.

heston2014

Unfortunately, that’s the catch with ex-council properties especially in blocks. Lenders have a property criteria and would usually require a minimum percentage of privately owned flats.
Last time we attempted to remortgage our ex-council flat, the surveyor reported inaccurate information such as % of privately owned (25% instead of 40%) and that it was not marketable, so we were rejected on that basis.

You should check the lender’s property criteria for ex council flats before applying to save you all the effort and get rejected.

It’s not impossible as there are lenders that consider such properties but do check the criteria before applying.

Things to look out for:
- flats above 4 floors
- privately owned minimum % (most at least 50%)
- no deck access (this is where front door is via a communal walkway)

Your broker may not had been aware of these, so if you do decide to pursue ex council properties, make sure that you highlight these with the broker before they submit full application to lenders.

if you are able to request a copy of the valuation report, would be helpful to understand what their comments were so you can research lender criteria.

gwynlas

Is it a BTL or residential mortgage you are wanting? 
I would not want a residential home in a low percentage owner occupier block because you have zero control over neighbours with possible anti social behaviour and future costs. Local Authorities can and do update facilities when funding available to them you could face massive bills if  for example they choose to replace windows or lifts.
Traditional lenders are wary of ex local authority property for this reason.

WorthyJ2000

Thanks to both heston2014 and gwynlas. It was a residential mortgage I was looking for. I'll take your advice onboard for the next property I look at.

Thanks

silvercar

You need a broker experienced in this area. It may be that you can ask the seller who they have their mortgage with.