Updated: February 24, 2022

Ex-Council Property Mortgages

Looking for an ex-council house mortgage? Finding lenders for ex-local authority properties can be straightforward - our guide will tell you exactly what to do!

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: February 24, 2022

Ex-council houses or flats are hidden gems when it comes to property purchases. Often cheaper, decent size and usually located close to a variety of useful amenities, they offer a unique opportunity for investment. But preconceived notions about such properties mean the mortgage process can be harder.

By reading this guide though, you’ll be able to better understand what lenders are looking 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 to be 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, due to the non-standard materials used for their construction affecting the resale value.

While that’s not always the case these days, the stereotype still exists and some lenders just won’t deal in mortgages for ex-local authority properties as a result. Others will, but tend to take a more stringent approach, relying heavily on a surveyor’s assessment of the property to make sure it’s in tip top shape.

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

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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:

  1. Find out if the council is still the freeholder (i.e. owns the land the property is built on): If they are, be aware that they’ll be setting the service charges for maintenance and repairs of the building/area throughout your ownership.
  2. Consult a broker with expertise in ex-council properties. An experienced broker will talk you through a list of lenders offering ex-council house mortgages and the best rates they can find for your financial situation. Select the one that looks best to you and work with a broker to submit a mortgage application including information on your incomings, outgoing, deposit and credit score.
    Should you have bad credit or a lower deposit, also let your broker know so that they can tailor their lender search with this in mind. If you make an enquiry we can introduce you to an advisor we work with straight away.
  3. Await a surveyor’s assessment. A valuation of the property is something that you will have to pay for and the lender will organise. The idea behind it is to give the lender an understanding of the property’s value and general condition so they can make an informed decision about a mortgage.  You should also consider paying for your own surveyor’s report which will include signs of poor maintenance of the property and surrounding area, evidence of fly-tipping and low market demand for the area. It should report on the condition of the property in a very detailed way. Remember, a valuation is different to a survey. The mortgage brokers we use can help you find a good surveyor

Once approved for a mortgage, your broker can work with you and your solicitor to get all the paperwork done. 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. Depending on what type of property you’re looking for, there’ll be different things lenders and surveyors will be considering.

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. Here concrete is the enemy. In the past, it has led to structural issues that has seen many ex-council houses demolished or reinforced.
  • The resale value. They’re thinking about how likely it is 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 there might be higher maintenance costs that will impact the likelihood of a resale.
  • Whether there’s a communal walkway or balcony. These are seen as a potential security risk although some lenders are taking less of a position on this these days.
  • 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 there are still some who will look at 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:

Income

It’s important for a lender to know how much you’re earning so they can see if you can afford the monthly repayments. The bigger your earnings, the safer bet you are. Most lenders offer mortgages capped at 4.5 times annual income, some 5 times and a minority 6 times.

Outgoings

A lender wouldn’t be doing their due diligence if they didn’t ‘stress test’ your finances to make sure that even with interest rate rises you’ll be able to afford the mortgage. That means combing through your monthly spending habits. Top tip: eliminate any excessive spending habits before application time.

Deposit

The bigger deposit you have, the better your chances of approval should be. Usually lenders won’t accept less than 10% of the property value, but there are a few specialist lenders who may be prepared to go lower, depending on the overall strength of your application.

Age

Some lenders won’t approve mortgages for people over 75 or 80 depending on the circumstances.

How can a broker help?

Despite the pool of lenders being smaller 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 criterias more favourable to you and your property;
  5. Compare rates and get you 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 0808 189 0463 or make an enquiry.

FAQs

Can I get a mortgage for a council property with bad credit?

Yes, it’s still possible. Obviously, a clean credit history is the preference but that’s not always possible. If yours isn’t as good as you’d like it to be, don’t worry. Some of the brokers we work with specialise in navigating the system for those with bad credit.

Can I get a mortgage for a council house if I’m a first time buyer?

Yes. In fact, they are a good option for first-time buyers as they’re often a lot cheaper than other property types.

What is the right-to-buy scheme?

This has been in effect since the 1980s and gives most council tenants the opportunity to buy the council-owned property they’ve been living in at a discounted price.

If a person was living in their council house and ownership was transferred to another landlord, say a housing association, and the house is now ex-council they then have what’s called the ‘Preserved Right to Buy’.

How do I know my property is ex-local authority?

There’s two ways you can establish this. You can ask the estate agent who’s selling the house or flat for the property’s history or, if it’s not actually for sale through an agent, you can buy a copy of the title deed information from the Land Registry.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different Property Types. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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