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Mortgage lenders must be ‘more tolerant of non-standard construction’ – brokers

  • 26/04/2019
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Mortgage lenders must be ‘more tolerant of non-standard construction’ – brokers
Intermediaries have urged lenders to take a more understanding approach when lending against properties which have been built in non-standard ways.


David Sheppard, managing director of Perception Finance, noted that when clients are looking to purchase properties in the country, it can be tricky to identify lenders who will consider the case.

He said: “We recently had a barn conversion for a client and found very few lenders willing to lend on it due to the construction type. More needs to be done by the lending market to be more tolerant of non-standard construction.”

Sheppard’s concerns were echoed by Andy Wilson, director of Andy Wilson Financial Services, who cited the example of a client who had wanted to purchase a bungalow built in the 1960s which was timber framed, and clad in cedar wood shingles.

“With no brick skin this made it an unconventional build type, and none of the mainstream lenders would touch it,” he explained.

Non-standard construction may be a particular issue when it comes to equity release.

The most recent criteria tracker from Knowledge Bank found that ‘non-standard construction’ was the third most common search term for brokers searching for equity release deals, while ‘timber framed construction’ took second spot.

Knowledge Bank noted that brokers are increasingly searching for criteria related to the property itself with equity release deals, rather than the actual loan.


Ignoring demand

Wilson added that while lenders are understandably wary of lending against non-standard properties because of potential resale issues, there are occasions when they overlook the actual demand for such homes.

He noted a client who had built an eco-friendly detached home in Scotland, which was wood framed but with solar panels and an air-source heating system, who wanted to release equity.

This was also difficult to place “despite the property being in demand due to its eco-friendly credentials, and would find a ready market, especially in Scotland where wood designs are more common,” Wilson said.


It’s not just an issue in the country

Sheppard added that the excessive conservatism from lenders carries over to city-based properties as well.

“The reluctance to lend from some lenders for high rise new build, ex-local authority flats and flats above retail outlets is also an issue. I understand the need to consider the resale options in the event of repossession, but in high density populated areas this should be less of a concern than it is,” he concluded.


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