Why loans on high rises are hard to come by
THE tragedy of Grenfell Tower is likely to scare lenders considering applications for loans on similar high rise properties.
Most of the properties in the tower were either local authority-owned or social housing. But some had been purchased privately, a few with mortgages.
Finding a willing mortgage provider to lend on skyscraper flats was already a challenge.
Some banks and building societies will not lend on any ex-local authority homes and even if they do they may restrict the percentage of loan they will allow compared to the value of the property.
Certain older concrete construction also puts off lenders, says David Hollingworth of mortgage broker London & Country. He says: ‘Some banks and building societies will simply not lend on flats within blocks over a certain number of storeys, even if the flat is on one of the lower floors.’
Hollingworth adds: ‘Some are more open than others to lending.
‘Nationwide Building Society, for example, normally only considers loans on flats in blocks up to five storeys, though if it is in Greater London they will consider higher buildings – but at the discretion of the valuer’s report.
‘Essentially it is the valuer who influences the final decision on agreeing any loan.
‘This is based on the expected marketability of a flat in a tall building should a lender need to repossess the property and then sell it on.’