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    • dan2104
    • By dan2104 3rd Oct 17, 12:27 PM
    • 6Posts
    • 0Thanks
    Mortgage rejected due to high-rise flat, what should I do?
    • #1
    • 3rd Oct 17, 12:27 PM
    Mortgage rejected due to high-rise flat, what should I do? 3rd Oct 17 at 12:27 PM
    Hi everyone,
    Really struggling with a decision to make on a flat. First time buyer with my girlfriend in London. We had an offer accepted on a flat that's ex-local authority, 8th floor. Our broker told us all would be fine, he had to go with second option lender which was Halifax.

    We start the ball rolling, but then get a call from the surveyor while he's outside the property saying 'I'm not going to bother doing the survey, they will not lend on this.' Cue panicked call to broker who assures us they will...turns out they won't. But broker has now provided us with another option (already the third) which is slightly higher interest rate.

    We are terrified that if we buy this place we'll be lumped with something that's tricky to sell later on (given the mortgage problems we've had with it). Are we worrying over nothing? Broker says it should be fine, but it's shaken our confidence. Plus other people we know (property developers etc) say don't buy it.

    Should we pull out? Or reduce our offer? Or just carry on?

    Sorry for the long post. Any advice greatly appreciated!
Page 1
    • davidmcn
    • By davidmcn 3rd Oct 17, 12:36 PM
    • 7,873 Posts
    • 8,058 Thanks
    • #2
    • 3rd Oct 17, 12:36 PM
    • #2
    • 3rd Oct 17, 12:36 PM
    Ex local authority multi-stories are pretty much unmortgageable (or at least very difficult to mortgage) because (a) risk of very high service charges when they decide to replace the lifts, replace the cladding etc and (b) buyers don't like them (partly because of (a) and everyone is now twitchy post-Grenfell anyway). Usually advertised as "cash buyers only", though maybe your broker has a cunning plan.
    • lika_86
    • By lika_86 3rd Oct 17, 12:45 PM
    • 1,263 Posts
    • 4,598 Thanks
    • #3
    • 3rd Oct 17, 12:45 PM
    • #3
    • 3rd Oct 17, 12:45 PM
    Things like this would put me off an ex-local authority place
    • AdrianC
    • By AdrianC 3rd Oct 17, 12:46 PM
    • 17,602 Posts
    • 15,970 Thanks
    • #4
    • 3rd Oct 17, 12:46 PM
    • #4
    • 3rd Oct 17, 12:46 PM
    You have two choices.
    1. Pull out.
    2. Find a lender that will lend against it.

    It's not rocket science to assume that if 2 is difficult for you, it will also be difficult for any potential buyer when you come to sell. It may be that it's unusually difficult at the moment, with the Grenfell jitters, but who's to say there won't be other similar issues in the future?

    Look at the advice you're receiving. On the one hand, people with no skin in the game but with property experience and knowledge say "Don't". On the other hand, somebody whose fee depends on your proceeding says "It'll be fine".

    I certainly wouldn't buying entertain a high-rise flat with a local authority freeholder. You have the potential for a whole list of less-than-optimal factors affecting your life there, from a very high share of refurbishment costs, through to the likelihood of neighbour issues, through to potential redevelopment with compulsory purchase.
    • hazyjo
    • By hazyjo 3rd Oct 17, 12:52 PM
    • 10,660 Posts
    • 13,943 Thanks
    • #5
    • 3rd Oct 17, 12:52 PM
    • #5
    • 3rd Oct 17, 12:52 PM
    Which area (ignore first post - had presumed London)?

    I doubt I'd touch it with a bargepole unless it was in a lovely old art deco building at Mornington Crescent like my ol' nan and grandad used to live in.

    As above, ex-LA highrises are usually pretty much unmortgageable. Any downturn in the market will make it nigh on impossible to shift to anyone other than a cash buyer as nobody will be lending on it.

    Plus a lot will be earmarked for demolition in the future. Google the name of it for rumours.

    Council owned buildings are notorious for slapping a large bill through your letterbox for things like windows, roof, lift replacement, etc rather than high service charges. Usually it'll just come out the blue, with some warning if hugely expensive, but still not long to find many thousands.

    Up to you at the end of the day...
    2018 wins: Single Malt Whisky; theatre tickets; festival tickets; year of gin(!); shoes
    • RobertoMoir
    • By RobertoMoir 3rd Oct 17, 1:42 PM
    • 3,374 Posts
    • 4,103 Thanks
    • #6
    • 3rd Oct 17, 1:42 PM
    • #6
    • 3rd Oct 17, 1:42 PM
    Someone I work with has just sold a flat in a council block. They were getting stung left right and centre with heavily loaded service charges and were very glad to be out of that situation. That makes similar properties a probable bad buy in my opinion, before we've even thought about the whole "post-Grenfell" affect on saleability, etc.
    If you don't stand for something, you'll fall for anything
    • Cakeguts
    • By Cakeguts 3rd Oct 17, 2:39 PM
    • 4,425 Posts
    • 6,359 Thanks
    • #7
    • 3rd Oct 17, 2:39 PM
    • #7
    • 3rd Oct 17, 2:39 PM
    If it is cheaper than most other flats nearby that is because it has a problem. The problem that it has is that it is in an ex local authority block and on the 8th floor which is why you can't get a mortgage and neither will anyone else.

    Best idea is to pull out and look for something more usual that you can get a mortgage on.
    • HouseBuyer77
    • By HouseBuyer77 3rd Oct 17, 5:22 PM
    • 924 Posts
    • 912 Thanks
    • #8
    • 3rd Oct 17, 5:22 PM
    • #8
    • 3rd Oct 17, 5:22 PM
    To add to the 'pull out' decision maybe after some research you find that there are a number of lenders who will lend on this kind of property but that might not always be the case.

    If the housing market takes a tumble and/or lenders start tightening up criteria you may find it's no longer possible to get a mortgage on. Bad news for remortgaging and bad news for selling.
    • teddysmum
    • By teddysmum 3rd Oct 17, 5:31 PM
    • 9,044 Posts
    • 5,393 Thanks
    • #9
    • 3rd Oct 17, 5:31 PM
    • #9
    • 3rd Oct 17, 5:31 PM
    If the council owns a number of the flats, thus opening you to having to contribute to any work done outside your flat, do remember that they are not usually very good at obtaining the best price for the job , as it's your money they are spending and that they tend to go for unnecessary image boosters, at your expense. (eg look at the extra safe cladding we've put on all our flats even though that removed was just as good )
    • Petite Anglaise
    • By Petite Anglaise 4th Oct 17, 12:59 PM
    • 59 Posts
    • 26 Thanks
    Petite Anglaise
    I would be tempted to just move on and keep looking for another property.

    Ex-local authority are definitely more affordable, especially when you're looking in an expensive place like London. However, my perception is that they are the first to be hit by price/market drops.

    What you describe sounds like there will always be an issue with getting a mortgage as it's 8th floor ex-LA...if you do eventually find a lender willing to give you a mortgage, your buyer a few years down the line will have the same problem and you may find it hard to sell, especially if the market takes a downturn.

    If I was in your shoes, I would just keep looking and not give this place a second thought- for me, it would be more (potential) headache than it is worth.
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