Minimum 15% Deposit For Flats/Apartments England

mattd2505

Hi - I'm a first time buyer, looking to move into a flat or apartment in England. I've saved for a number of years to get what I thought would be a decent 10% deposit on the value of properties that I'm looking at purchasing, but when checking to see if I could get a decision in principle, I have been told by multiple banks/societies that I'd need a 15% deposit for a flat.

I wasn't aware that this was a common thing, is it law or are there any providers who offer a 10% deposit? I can continue to save of course, but it's a real kick in the teeth that's set me back considerably.

I can't get my head around the reasoning behind this either if anybody could enlighten me. To use some rough figures, I'm looking at a £150,000 property and that would therefore require me to have £22,500 as a minimum 15% deposit on a flat. But I could purchase a house for £170,000 at a 5% deposit, which is £8,500. It seems remarkable to me that I can purchase a more expensive property with under a half, nearly a third of the deposit.

Thanks in advance for any information!

user1977

mattd2505 said:

I can't get my head around the reasoning behind this either if anybody could enlighten me.

It's because in the current climate lenders regard flats as being a greater risk than houses.

mattd2505

user1977 said:

mattd2505 said:

I can't get my head around the reasoning behind this either if anybody could enlighten me.

It's because in the current climate lenders regard flats as being a greater risk than houses.

That makes a bit more sense, if you mean that house prices are more likely to rise than flat prices? Or is it that the value of flats are more likely to drop?

Thanks for your help

tacpot12

I think it will be that flat prices are more likely to drop. The risk might be related to the issue of cladding. 

user1977

mattd2505 said:

user1977 said:

mattd2505 said:

I can't get my head around the reasoning behind this either if anybody could enlighten me.

It's because in the current climate lenders regard flats as being a greater risk than houses.

That makes a bit more sense, if you mean that house prices are more likely to rise than flat prices? Or is it that the value of flats are more likely to drop?

More that there's more dubiety about how reliable current valuations are for flats than houses.

mattd2505

Thank you everyone for your help - makes much more sense to me now

clueless_but_curious

Many Council-owned apartment blocks e.g. The Gables in Milton Keynes are being demolished because the retro-fit is uneconomical.  Be very careful looking at blocks

ACG

I received an email this week about a lender who was doing 90% LTV on flats. I have deleted now and for the life of me I can not recall who it was. 

Have you spoken to a broker? We have sourcing systems that help us to find products, I am 99% sure there are lenders out there, but I think there may only be 2-3 so its not that it is illegal, it is more a case that lenders are just a little wary with high LTVs on flats. 

If they have to repossess there is usually less demand for them so it may take them longer to get their money back and at 90% they would probably lose money. 

[Deleted User]

your example is cherry picking 2 different parts of criteria and available products.  

Yes there are lenders who need 15% deposit for a flat and some that require a 5% deposit for a house. However there are also high street lenders who will lend on flats with a 5% deposit, and there are other lenders that require a 15% deposit for a house or a flat. Even got lenders that will require a 40% deposit to do anything with them.  

If every lender offered the same types of mortgages on the same types of properties then we would only need 1 mortgage company.   As it is, we have about 100 mortgage companies so best advice is always to seek out a broker who knows which lenders will do what you want to do.