Ex-Council Property Mortgages

Ex-council houses or flats are hidden gems when it comes to property purchases.

Often cheaper, decently sized, and usually located close to a variety of useful amenities, they offer a unique opportunity for investment. But preconceived notions about such properties can make the mortgage process harder.

By reading this guide, though, you’ll better understand what lenders look for when they assess a mortgage application for this property type, how to navigate the process, and what it takes to get an ex-local authority mortgage.

Can you get a mortgage on an ex-local authority property?

Yes, absolutely, but it can be trickier than getting a mortgage on a standard property.

This is because most mortgage lenders are risk-averse, and in the event of repossession, ex-council properties can prove more problematic to sell than private properties.

This can be attributed to the area where they’re traditionally located—typically surrounded by government-rented properties—and also, in some cases, to the non-standard materials used for their construction, which affect the resale value.

While that’s not always the case, the stereotype still exists, and some lenders just won’t deal in mortgages for ex-local authority properties as a result.

Others will, but they tend to take a more stringent approach, relying heavily on a surveyor’s assessment of the property to ensure its top-notch condition.

Given that the chances of mortgage rejection are much higher for this property type, it is recommended that you apply through a broker who specialises in ex-local authority homes.

How to get a mortgage on an ex-council property

If you’re looking at buying an ex-local authority property, these are the steps to follow:

Once you are approved for a mortgage, your broker can work with you and your solicitor to complete all the paperwork.

If denied, a broker can help you salvage your plans by advising you on other lenders to apply to.

Types of ex-local authority property you could buy

Ex-council properties will mainly be flats, maisonettes, bungalows or houses. Lenders and surveyors will consider different things Depending on the type of property you’re looking for.

For all properties, they’ll be asking:

• Where it’s located: They want to know the area is safe and popular with prospective buyers.
• Who owns the other flats/houses: A controversial issue, but typically, they’re looking for a high number of private owners.
• What it’s made of: Concrete is the enemy here. In the past, it has led to structural issues that have seen many ex-council houses demolished or reinforced.
• The resale value: They’re considering how likely you’ll be able to pay off the mortgage, and a future sale could influence that.

If it’s a flat, there are a few extra considerations:

• Whether it’s in a high-rise: Anything above five storeys, and some lenders stay clear for fear that higher maintenance costs will impact the likelihood of a resale.
• Whether there’s a communal walkway or balcony: These are considered potential security risks, although some lenders are taking a less strict stance on this.
• The size of the flat: There’s a misconception that all ex-local authority houses are small, but that’s not necessarily the case, as more modern regulations have stipulated different dimensions.
• If the kitchen is separate from the living space: Not every lender is keen on mortgages for studio flats, but some will still consider these types of applications.
• If there is cladding in the building: Following the Grenfell Tower tragedy, even if a property is attractive in all other aspects, some lenders won’t take the risk on buildings with cladding.

Is one type harder to get a mortgage on than the other?

Yes. Given all the extra considerations, a flat is generally harder to get a mortgage on. But, with the right advice and know-how, getting a favourable mortgage deal for an ex-council flat is possible.

Eligibility criteria

Before you head down this road, you have to ask whether you’re even eligible to buy such a property. Just like with regular mortgages, a lender will be looking at various factors to determine how reliable a borrower you’re likely to be.

To do this, they’ll want details on:

How can a broker help?

Despite the smaller pool of lenders for an ex-council property, an experienced broker should still be able to find you a rate and lender you can move forward with while walking you through their various preferences.

In this situation, they can:

1. Advise on any issues they think a lender might have with the property you’re buying;
2. Discuss how they might be improved upon;
3. Explain what a surveyor might be look for;
4. Identify lenders happy to work with ex-council property mortgages and those with criteria more favourable to you and your property;
5. Compare rates and get yourself the best deal out there;
6. Help put your application together;
7. Talk you through what having the council as a freeholder might mean for your ownership; and
8. Boost your chances of mortgage approval.

Get matched with a broker experienced with ex-council properties today

If buying an ex-local authority property is something you’d like to explore, a free consultation with a broker specialising in ex-council properties could help.

Familiar with lenders’ aversion to such properties, they’ll be able to guide you through the process and ensure you’re able to get the property you want with a mortgage that works for you.

Call 0330 822 0505 or make an enquiry.