Lending Criteria – Property

This section of our criteria is all about the property. We have broken each element down, please click the required link from the list below to read each element.

 

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Property Location

Lending in England (including the Isle of Wight), Wales and Scotland including the below Scottish Isles is considered:-

  • The Orkneys
  • The Shetlands
  • Arran
  • Bute
  • Harris and Lewis
  • Islay
  • Mull
  • Skye

The Society does not lend in the Isle of Man

There are restrictions by lending and property type summarized in the table below.

England Wales Mainland Scotland Scottish Isles
Lending Types
Standard P P P P
Shared Ownership P P x x
Near Prime P P P P
Buy To Let P P x x
Self-Build P P P P
Custom Build P P P P
Property & Tenure Types
Freehold Flats/Maisonettes x x x x
Freehold House/Bungalows P P P P
Leasehold Flats/Maisonettes P P x X
Leasehold House/Bungalow P P x X

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Tenure

Freehold
  • Freehold tenure is acceptable for houses and bungalows in England, Wales and Scotland
  • Freehold flats and maisonettes are unacceptable
Leasehold
  • Leasehold tenure is acceptable for houses, bungalows, flats and maisonettes in England and Wales
  • The unexpired lease term at valuation must be at least 85 years
  • Leasehold tenure is acceptable provided Ground rent, Service Charges and the review process is reasonable as confirmed by the valuer

Examples of unacceptable terms are:

  • Where ground rent escalation is linked to the value of the property or an index greater than the Retail Price Index (RPR)
  • The current ground rent is 0.5% or higher of the property value
  • The rent review period is 5 years or less
  • The ground rent doubles in less than 20 years
  • Ground rent is £250 (£1000 in Greater London)
  • There are disproportionate Service Charges

The above list is not exhaustive and we will be guided by the valuer and Solicitor when determining whether a leasehold property is acceptable.

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Property Type/Construction

All

The following criteria applies to all lending types:-

Type/Construction Residential BTL Self-Build

Renovation/

Conversion
Houses and bungalows of standard construction P P P P
Grade II and Grade II* buildings subject to valuation P P P P
Modern timber framed properties with external brick skin P P P P
Properties with a thatched roof P P P P
Modern oak framed properties P P P P
Houses with a Flying Freehold

Subject to valuation and legal opinion

 P P P P
Modern steel frame properties subject to referral and valuer’s comment to HLC P P P P
Solar panels providing that the following applies:-

Where solar panels are subject to a lease, confirmation from the Society’s Solicitor and valuer that the lease does not affect the Society’s security

 P P P P
Private water supply subject to certification for the water being fit for consumption.

The local authority will be required to undertake the testing. In respect of shared private water supplies these will be referred to our solicitors on any anomaly

 P P P P
Properties with 100% flat roof

Subject to referral and valuer’s comments to HLC (excluding “living roof” e.g. – grass, vegetation planting)

 P P P P
Septic Tank

Where a shared septic tank is in place, the Society will consider these subject to formal documented responsibilities being in place for all parties in respect of maintenance and repair/replacement and confirmation that the tank fully complies with statutory requirements.

 P P P P
Underpinned properties with guarantees P P x P
Former local authority homes P P x x
Right to Buy houses of standard construction P x x x
WIMPEY No Fines Construction in good condition P P x x
Properties that have a granny flat or annex (subject to details of the proposed usage and occupancy) P x P P
Properties of non-traditional construction deemed defective under the Housing Defects Act 1984 which have not been modernised under an approved scheme. x x x x
Properties with ongoing structural movement. x x x x
Back to Back terrace or cluster x x x x
Woolaway houses as named in the Building Research Establishment Report 1983 and built between 1945 and 1960. x x x x
High Alumina Cement x x x x
Any purchase where part-exchange is involved x x x x
Smallholding x x x x
Holiday Lets x x x x
Property or Land with Commercial Use x x x x
Properties designated with HMO x x x x
Land only in any circumstances x x x x
Live/Work Units x x x x
Over 55s residential to retirement properties x x x x
Log Homes

Including Erland House log homes & Jim Barna Log homes, Easiform cavity walled concrete houses, Wimpey no fines, Elliot eHouse and PRC systems designed defective

 x x x x

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Flats

The Society does not lend on flats in Scotland. Other considerations are listed below.

Type/Construction Residential BTL Self-Build

Renovation/

Conversion
Flats up to  10 floors P P x x
Converted Flats up to 10 floors

Subject to conversion being undertaken with full planning and building regulation consent and that there are no onerous conditions contained within the lease and that the building is being professionally managed.

Commercial to Residential are not acceptable other than hospitals, schools, churches, pubs, doctors, police stations

 P P x x
Flats above commercial premises are acceptable

Under the following requirements, subject to a maximum of 10 floors and HLC approval where applicable.

A1 Shops – defined as – hairdressers, undertakers, travel and ticket agencies, post offices, pet shops, sandwich bars, showrooms, domestic hire shops, dry cleaners, funeral directors and internet cafes.

A2 Financial and Professional Services – defined as – Banks and building societies, Solicitors, Architects, Accountants, Estate Agencies and Employment Agencies.

 P P x x
Flats with an internal floor area of 35 square metres or less x x x x
Studio Flats x x x x
Basement Flats x x x x
Local Authority built flats and maisonettes x x x x

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Self-Build, Renovations and Conversions

The following build types are acceptable for Self-Build and Renovation/Conversion only.

Type/Construction Residential BTL Self-Build

Renovation/

Conversion
SIPS (Structurally Insulated Panels)  

With an external cladding of brick, brick slip finish, cement/polymer render or cement weatherboard. The use of treated timber cladding (e.g. Larch or Western Red Cedar) will only be considered where its presence does not exceed a maximum of 50% of the total external wall surface.

 x x P P
ICF (Insulated Concrete Forms)

With external brick, brick slip or cement/polymer render or cement weatherboard finishes. The use of treated timber cladding (e.g. Larch of Western Red Cedar) will only be considered where its presence does not exceed a maximum 50% of the total external wall surface

 x x P P
Modern Timber Framed Properties

With brick slip, cement/polymer render or cement weatherboard external clad finishes. The use of treated timber cladding (e.g. Larch or Western Red Cedar) will only be considered where its presence does not exceed a maximum of 50% of the total external wall surface.

 x x P P
Partially built properties (subject to:

– Certification and inspection certification;

– Confirmation that the property has been constructed in accordance with planning/building requirements;

– Valuer confirmation they have viewed all documentation and guarantees are available for the work completed to date).

 x x P P
Semi-detached properties where the building is being built onto an existing house and not dependant on a third party to complete another adjoining property. E.g. Detached property to semi-detached or semi-detached to terrace (total of 3 properties) x x P P

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Restrictions

The following restrictions are acceptable to the Society:-

  • Plots/properties subject to Restrictive Covenants – considered individually by the Society on a case by case basis
  • Plots/properties subject Section 106 agreement

Estate Rent Charges are acceptable subject to the following:-

  • The Provisions under section 121 of the Law of Property Act have been excluded under the estate rent charge clause
  • The estate rent charge clause includes a mortgagee protection clause, which states that notice of at least 28 days is to be given to the mortgagee prior to any enforcement action being taken by the owner of the estate rent charge
  • The owner of the estate rent charge is a management company comprising of the residents, who are shareholders of a private freehold development

The following restrictions are not acceptable to the Society:-

  • Properties with statutory tenants
  • Properties subject to agricultural or other planning restrictions
  • Properties that have previously flooded
  • Properties with possessory title
  • Properties subject to a local occupancy clause
  • A group development e.g. builder/developer offering multiple plots
  • Properties identified with contaminated land or within the vicinity of the property.

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Maximum Number of Bedrooms

  • The maximum number of bedrooms is 6

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New Builds

The following new build warranty schemes are acceptable to the Society: –

  • NHBC
  • Premier Guarantee
  • Castle 10 (Checkmate)
  • Build Zone
  • Building Lifeplans Ltd (BLP Allianz Guarantee)
  • LABC New Home Warranty
  • Protek
  • Professional Consultants’ Certificates (meeting the UK Finance Handbook requirements)

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Builders Incentives

  • New Build houses subject to cash incentives/builder deposit are not acceptable
  • Flats subject to cash incentives/builders deposit and resale issues raised by the Valuer are not acceptable

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Properties Close to Commercial Outlets

  • Properties close to commercial outlets will be considered but are subject to valuation

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Valuation

  • Valuation reports are valid for 6 months
  • Valuation/re-valuation/re-inspection fees are payable by the borrower
  • The borrower will be responsible for the cost of further valuations (Valuations will be instructed by the Society through the Panel Manager)
  • Further Advance Only: Home Improvement Loans – For cases that are below 75% on last valuation including the proposed new borrowing a re-valuation is not required (For any other borrowing other than home improvements, a re-valuation is required if the one on the system is more than 2 years old)

There are specific valuation requirements for Self-Build Self Build – Valuation and Custom Build Custom Build – Valuation.

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Minimum Valuation

  • A minimum property value of £50,000 is applicable to all lending types

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Purchasing at Auction

Plots/properties bought at auction are acceptable for Self Build applications only, subject to details below being provided to the Society within 15 days prior the auction:

  • A minimum of outline planning permission;
  • A full report and valuation;
  • Decision in Principle (DIP)

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Sub Letting

  • Sub-letting a residential property is not acceptable.

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