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Non Traditional Construction -Bank Declined Mortgage

Hi Everyone

Just wondered if anyone had any information on this.  After three months of sorting out a mortgage with Nationwide, they eventually declined stating - The subjects are classed as 'defective' under the Housing (Scotland) Act 1987. Lender guidance confirms that they do not therefore form suitable security for mortgage purposes.

But the Scottish Government repealed the ‘defective’ designation of these houses on 30th July 2018. These houses are still classed as defective in England and Wales, but not in Scotland under section 99 of the Housing (Scotland) Act 2014.  Prior to this in 2014, a survey on a range of Orlit houses was carried out by the UK government in England, and it was the flat-roofed houses that were found to be defective, not the pitch-roofed houses - this Orlit house is a pitched roof.

Nationwide only did a 15-minute basic survey - although I had asked for the highest level of survey.

A relative wanted to buy this house, and was ready to put down 40% of the loan value but the bank declined.  I'm just wondering why banks (or this bank) are saying it's defective when the Scottish gov says it no longer classed as that?  I know banks are wary of lending on NTCs, but has anyone else been able to achieve a mortgage with reasonable rates on these types of houses?  Have read a lot of the other threads on here about this but nothing seems too recent.  Thanks.

Comments

  • kingstreet
    kingstreet Posts: 38,614
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    FWIW regardless of the survey level you choose, Nationwide will get only the mortgage report and valuation and will not get access to the survey you contract directly with the surveyor.

    Unable to comment on the substantive issue in the post. Is your solicitor not able to raise this with Nationwide.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • Thanks for the reply. 

    Nationwide did the survey, they were also acting as the solicitors for the sale. They were classing it as a remortgage (there's no mortgage left to pay on this house) and the relative who wanted to buy it has a third share in the house. It seems they just saw 'classed as defective' on the report due to this type of concrete/steel construction and decided, nope, that's it.  I emailed them and told them they were using an outdated Scottish Housing Act, but no reply from them.   Also, I had originally contacted an estate agent for a valuation and they valued the house but said - before any survey was completed - that they would knock a third off the house price due to it being of nonstandard construction and that it's hard to get a mortgage (true it seems) and it would prob only be a cash sale, hence the lower price.
  • It might be that it falls outside nationwide lending criteria. It might not be classed as defective, it doesn't mean they have to lend on it. 
    Many lenders don't like flat roof property and don't lend on 100% roof as an example. 
  • 'It might not be classed as defective, it doesn't mean they have to lend on it.'

    Yeah, the government guidelines do say that they hoped that the new ruling of not defective would lead to more lenders providing mortgages on these types of houses but they can't force them to lend.  That's why I thought there was no point pursuing it any further re Nationwide.  From what I've read, one of the reasons they don't like lending on NTC is that if the mortgage payer defaults, it could be harder for the bank to then sell the property.

  • gwynlas
    gwynlas Posts: 1,622
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    It would  be worthwhile putting all this information in front of a whole market mortgage broker who can search for a suitable product.
  • Thanks, Gwynlas, that looks to be the next step to see what lenders are available.
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