The change applies to its standard mortgage range and follows its standard new build policy for maximum loan to value (LTV) and loan size.
A Section 106 agreement is a planning obligation, or restrictive covenant, that allows the local planning authority to put in place certain caveats for planning permission to be granted.
This can include living within a certain radius before you can buy the property, earnings not exceeding a certain level, limiting purchase to certain professions and resale price covenant where if it goes to a first-time buyer then it takes place at a discount.
The increased complexity of Section 106 agreements, as each local authority is different, has made certain lenders hesitant to accept them or they may ask for a higher deposit or interest rates.
According to Criteria Brain, out of 72 lenders listed, only 34 accept properties with Section 106, and 37 lenders do not. One lender was due to update their criteria.
Franco Di Pietro (pictured), head of intermediary mortgages at Newcastle Building Society, said: “Clients looking to borrow on a Section106 property have limited options. We’re absolutely committed to helping people onto the property ladder, and continually reviewing our underwriting approach across all areas, to meet customers’ needs.
“In response to broker feedback we’re pleased to enhance our lending criteria to include properties with a Section106 agreement in place and confident that it will make a real difference to brokers and their clients, especially those looking to make that first big step into home ownership.”
