Whether you’re looking to buy a good investment or your first home, an ex-local authority property makes a great purchase. In Southfields, we market many ex-local authority properties and there are always certain questions that get asked, so I wanted to clarify some of the most commonly asked ones:
Are ex-local authority homes more affordable?
Yes, ex-local authority properties are a very good way for first time buyers to get a foot on the property ladder and a very popular route for Buy-to-Let investors too. A two bedroom ex-local authority property in good condition in Southfields will typically sell for between £380,000 and £400,000. A similar sized flat in a private 1960s block in the same area however will be priced between £430,000 and £450,000. First time buyers can therefore sometimes save around 40% by buying ex-local authority properties.
How is this different from buying another kind of home?
There is no difference. Although people do tend to still stigmatise ex-local authority properties, it is worth bearing in mind that it is quite common to find ex-local authority buildings which are almost entirely privately owned. Ex-local authority homes offer owners great value for money, are often in good condition and in conveniently located areas. In addition, there are many ex-local authority houses and maisonettes which are actually very mortgage worthy and very seldom encounter difficulties with lending.
Who maintains the building and is this an important factor?
Getting a mortgage is dependent on the quality of the flat itself and how well the estates are maintained. It’s important that the ex-local authority property is located in a good estate and/or in a council with a good track record for looking after them. Part of the buying process should include establishing if there are any major works scheduled and how much they will cost. In the past many estates were allowed to get run down, which ended in the owners being presented with a hefty maintenance bill for major repairs however, it is rare these days to encounter this happening and in my experience, the councils can be good freeholders. I often hear worse stories about private landlords trying to make money from leaseholders and neglecting maintenance.
I asked Kelly Wicks, Technical Director of KFH Financial Services, for further insight into the mortgage side of ex-local authority properties, she notes the following:
How easy is it to get a mortgage?
The key deciding factor in getting a mortgage on ex-local authority properties and what every mortgage lender will most likely say is that it is down to the comments of the surveyor. It can be a little more difficult than buying a normal property, however in recent years lenders are far happier to lend on these types of homes and so it’s really become more about finding a home that suits their requirements.
What puts them off?
Among the many observations, a surveyor may be concerned about the use of concrete, deck access and what floor the property is located on. In addition, they will want to know what percentage of the building is council occupied. The surveyors are the specialists here, so lenders rely on their advice for every aspect of the property.
Which lenders will lend on an ex-local authority property?
Most of the bigger banks and buildings societies, including Natwest, Halifax, Nationwide, Abbey (Santander) and Woolwich, tend to be more open to lending, although each of them have their own unique lending policies regarding deck access or the maximum number of storeys. Smaller lenders can take a more cautious approach to this type of security, although some like Aldermore often will. The trade-off may be however, that the lender will not have the most competitive rate.
Can this cause issues later down the road for resale?
There are usually no issues with resale in London and looking at certain estates that are becoming more privately owned, it seems that far from having issues with lending, many lenders are becoming far more confident.