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Leeds Building Society to start lending on s106 properties

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  • 26/11/2014
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Leeds Building Society to start lending on s106 properties
Leeds Building Society will begin lending on properties restricted by s106 agreements from 1 December, which can include affordable or local authority properties with restricted covenants.

The change will apply across its whole mortgage range, including shared ownership.

As discussed at Mortgage Solutions event The British New Homes Senate in October, section 106 has been a key driver of new-build in the UK, but lenders have traditionally been cautious on s106 properties and new-build in general.

At the conference, keynote speaker and mortgage market consultant Phil Jenks, said: “Mainstream lenders need to treat affordable purchase as mainstream,” said Jenks, “and face into shared ownership, shared equity and S106 issues.”

Leeds Building Society said few mortgage providers will lend on properties affected by a s106 Agreement, which limits choice for home buyers, and for homeowners affected by the obligation who want to remortgage.

Martin Richardson, Leeds Building Society’s general manager – business development, said: “A s106 agreement is increasingly becoming a common feature on new-build properties, which is one reason we decided to make changes to our criteria to support more borrowers

“We are always seeking to innovate and find new ways to respond to demand, particularly in under-served markets such as this, where the number of borrowers likely to be affected is sure to grow.”

Adrian MacDiarmid, head of mortgage lender relations at Barratt Development, said: “Leeds Building Society has made an enormous contribution to the new-build mortgage market this year and this is another valuable step which broadens the appeal of its proposition into an area that is not otherwise well served.

“We look forward to further developing our relationship with them for the benefit of our mutual customers.”

Kevin Belsham, UK sales and marketing director for Taylor Wimpey, said: “At present there is a significant lack of banks and building societies prepared to lend to customers wanting to buy affordable properties.

“Today’s announcement from Leeds Building Society is a step change in the right direction, highlighting its proactive approach to engaging with house builders and mortgage brokers to offer mortgages that meet our customers’ needs.”

NOTE: Section 106 agreements can be added as a condition to consent by a planning authority to exert control over how the land is used. This can affect eligibility to buy a property, by requiring purchasers to reside or work in a specified geographical area. If the s106 agreement is breached, the local authority can take legal action against whoever agreed to the planning obligation from the new-build developer to the subsequent property owner.

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