Alan Lakey, partner at Highclere Financial Services, stated that lenders’ ‘strange rules’ were adversely affecting borrowers. He cited criteria such as limited loan-to-values (LTV), refusing to lend over four floors or some lenders’ insistence that over 50 per cent of a block of flats must be in private ownership.
Lakey said one remortgage case that went to Coventry BS, where the client required 74 per cent LTV on a fixed rate deal with no penalty, was turned down as Coventry did not lend above 70 per cent.
He said: “Why do lenders have such ad hoc rules? A flat in London is still going to be in demand and they seem such arbitrary rules. If they say it’s a risk, it can be measured by other things than LTV. Lenders have got to get away from old school thinking, as risk is already factored into a property’s price. It’s nice to have flexibility and be able to talk to someone that is a decision maker who can bend the rules, especially when a computer application will kick it straight out.”
While a Coventry spokesperson confirmed the policy, they were unable to comment further.
Ashley Clark, director of NeedAnAdviser.com, said: “I can understand lenders’ reluctance to lend on ex-local authority properties because there can be questions over construction and with the tenants in the block. The law is also unclear on common hold land. At the end of the day, it is a competitive market and lenders can lend on exactly what they feel is a good or poor security.”
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