Listed Building Mortgages

Many people are drawn to the historic charm and individuality of listed buildings, whether as an investment or a dream home.

However, finding a suitable mortgage lender can prove frustrating for those looking to buy a listed property.

The good news is that we work with various brokers who specialise in sourcing mortgages for listed buildings.

By following this guide, you’ll better understand how to secure the funding you need, which lenders can help, and where to turn for the right advice.

Can you get a mortgage on a listed property?

Yes, it’s possible, but, perhaps unsurprisingly, it’s not as straightforward as for standard residential homes.

Properties classified as listed have a number of implications which can affect the resale potential.

This means traditional mortgage lenders can be reluctant to approve mortgages on them.

For example:

• Restrictive covenants that make it more difficult to carry out repairs, renovations, or remove certain characteristics
• The age of the property may mean it degrades more quickly than a typical building, potentially leading to a faster decline in property value
• High maintenance costs and the need for specialist traders, e.g. thatchers, which they will want to be confident buyers can afford

Many lenders will consider non-standard construction and niche properties, such as listed buildings, to be high-risk investments, as they’re typically more difficult to resell than standard construction and modern properties.

What types of listed buildings are there?

The National Heritage List for England defines three grades of listed buildings in the UK.

The classification is usually awarded to buildings with historic relevance or special architectural characteristics.

The specific grade will impact the mortgageability of a property, with grade I listed buildings being the most difficult to source financing for, followed by grade 2* and grade 2 listed buildings, mortgage lenders being most accessible of the three.

The three categories of listed buildings in England and Wales are explained below:

Scotland and Northern Ireland use very similar grading systems for their listed properties, but they are categorised as A, B and C, or A, B+ and B respectively.

Whilst some lenders won’t consider a mortgage on any listed property, there are options available with a range of building societies and banks, as well as more niche lenders.

It’s important to speak to a specialist broker to improve your chances of finding a lender who will support your application.

How a broker can help secure the lending you need

Because this is such a specialist area of lending, it’s important to seek advice from a mortgage adviser who has access to lenders willing to consider financing the purchase of listed buildings and understands the specific eligibility requirements.

We work closely with experts in this particular area of mortgage lending and can help you access their invaluable advice to ensure you approach the most suitable lender for your needs.

If you get in touch, we can arrange for a specialist to contact you directly and discuss your requirements in more detail.

Are there any lending restrictions?

While various lenders offer mortgages on listed properties, some of the terms are likely to be more restrictive.

Each lender has their own criteria, but mortgages on listed buildings often include:

• A lending cap on the term of the loan, usually 20 – 25 years
• Lower loan-to-value borrowing – it’s possible to find 95% offers, but many will cap this at 75-80% of the property value
• You won’t be able to use any government-assisted mortgage schemes to aid the purchase

Are there restrictions on interest-only mortgages?

Depending on your circumstances, you may be able to obtain an interest-only mortgage on a listed building. However, your choice of providers will be more limited, and a robust exit strategy/repayment vehicle will be essential to secure the lending you require.

Eligibility requirements

The eligibility criteria for borrowers are similar to those for a standard mortgage, so they will consider affordability, credit rating, and deposit or equity availability.

Deposit requirement

Some lenders, particularly high street banks and building societies, will require a higher deposit, with 25% being fairly typical.

However, there are lenders who will offer as much as 95% loan-to-value (LTV), meaning it’s possible to purchase a listed property with a deposit as low as 5%, depending on the strength of the application.

Things to consider when buying a listed building

Buying a listed building is not as straightforward as buying a standard residential home. Before you agree to the purchase, you must consider a number of areas.

Local Authority consent

When you own a listed building, you are required to gain consent from your local authority before you make any alterations to it.

This is not necessarily only required for large projects, and can include minor changes such as a new front door.

Failing to apply for local authority consent before working on a listed building constitutes a criminal offence, so it’s vital to ensure that you understand any restrictions before making a purchase.

A mortgage broker specialising in this type of property can help you understand the full scope and implications of any restrictions.

Is consent required for repairs?

Repairs could also require consent from the local authority, as what is considered a repair can vary from one council to the next.

The conservation officer at your local council can help you to determine this.

Has consent been sought for prior changes?

Another thing to be aware of is that any changes made without consent prior to your ownership can make you liable for them.

Depending on the nature of these changes, they could be incredibly costly to rectify.

If you discover unauthorised changes made by a past owner before purchasing, indemnity insurance can potentially protect you, so it’s important to speak to your solicitor about this.

Maintenance costs

Listed building ownership has a significant level of responsibility to maintain and preserve it.

This means that maintenance costs are usually substantially higher than they would be for a modern home. In addition to the need to source original materials to preserve the original characteristics, specialist tradespeople are often needed, driving the costs even higher.

You should also be prepared for local authorities to demand immediate repairs to any listed property under section 115 of the Town and Country Planning Act 1971, which they can do at any time. In some cases, however, grants from Historic England may provide financial support for such repairs.

The importance of finding the right surveyor

If you plan to buy a listed building, the importance of finding a surveyor who is experienced in this specific area should not be underestimated.

It can be the difference between having your mortgage application accepted or not, as mortgage lenders rely heavily on the surveyors’ valuation when considering mortgage approval.

As each lender has their own panel of surveyors, finding a lender that regularly deals with listed building purchases is therefore essential to the success of your application.

An experienced broker like the ones we work with can ensure that you approach the appropriate lender for this type of purchase.

Insurance requirements

Home insurance isn’t necessary for mortgage approval, but it’s important to consider it early in the application process to determine whether your needs and circumstances call for it.

Insurance premiums can be very expensive, and in rare cases, listed properties can even be uninsurable, so it’s advisable to have a policy approved before your purchase.

Do you need specialist insurance?

Insurance cover won’t necessarily need to be specialised. However, ensuring your policy covers the full cost of rebuilding the property is important.

An accredited surveyor can help you determine which policy is appropriate.

Get matched with a broker experienced with listed buildings

Speaking to a mortgage broker before you approach a lender is always highly recommended. This is particularly the case when it comes to the niche area of buying a listed building.

The experts we work with offer specialist knowledge of not only the most suitable mortgage lenders for this type of purchase but also the multiple key considerations of taking on a listed property.

Make sure you have the knowledge, guidance and support you need by giving us a call on 0330 822 0505 or make an enquiry now.