Updated: Jan 29
Warning: Many concrete construction properties are not acceptable loan security for many lenders
A Concrete construction property mortgage is a confusing and generally challenging area for lenders, brokers, agents, sellers and buyers alike as new issues arise as these building age. Precast concrete (PRC) and Large Panel Construction (LPC) are two areas that lenders proceed with caution or blatantly close the door. The reasons for concrete construction properties being shunned is that over time the chemical makeup of some of these concrete products have been proven to break down. But also some of the original construction techniques were found to be wanting due to reliance on no changes structural changes being made to internal walls. But what if there is a fire? Or a flood? In some older buildings this could weaken the integrity of the entire building. This was discovered in the 1980's and some strengthening work was completed to fix this issue but now some councils in England are finding that this work was not completed correctly if at all. The buildings were initially to house post war Britain as properties were scarce and it was a good solution to the housing crisis. The problem is that this new form of construction had not been proven over time and it seems that although many have leases of 100 years plus, the property may not last that length of time. Nowadays we have a much better understanding of concrete and testing.
After speaking with many of the mortgage friendly in the high rise concrete construction sector it seems that the following applies: 1. Lenders will always rely on an acceptable surveyors report on whether the property is suitable collateral for a mortgage
2. Most lenders will only lend if over 50% of the properties are already owner occupied and/or mortgaged properties.
3. The number of stories is important as well and most lenders would prefer 11 stories high or less.
The reasons are clear from a lenders point of view. Can the concrete construction property be sold if things go wrong and to be fair this should be a question you need to consider as well. Many of these properties are cheaper and in amazing places (central London, Manchester, Leeds, Glasgow to name a few and are very big with amazing views. This is lacking in new builds at the same value and the reasons vary but its important to seek advice from a chartered surveyor if you are unsure.
Warning: Many concrete construction mortgage properties are not acceptable loan security for many lenders.
What to do next?
Always speak to a mortgage broker and ask if it is possible to do some investigation before proceeding with loan approval. They may charge a fee for this but its is important that you don't go full steam ahead for a mortgage approval when it may impact your credit rating. Its better to find out bad news before committing to bad news and a mortgage decline which will have to be declared on your next purchase.
I hope this helps and can give you a heads up. Remember not all concrete construction buildings are un-mortgageable.