A Norfolk chief executive pulls out of buying a £600,000 penthouse after being told he couldn't get a mortgage
PUBLISHED: 10:16 11 December 2018 | UPDATED: 11:17 11 December 2018
A Norfolk group chief executive has criticised 'ridiculous' lending criteria after he was forced to pull out of buying a city centre penthouse because he could not get a mortgage.
The businessman, who does not want to be named, but works locally as a group chief executive, wanted to buy the £600,000 penthouse apartment for sale at Conisford Court on Rose Lane in the centre of Norwich. He had instructed a solicitor and was in the process of buying the property when to his astonishment, following a survey, the lender declined the mortgage.
The reasons given were because the development, where 26 apartments went up for sale in May, is too close to a petrol station as well as the Rooftop bar and restaurant. Other reasons cited were to do with the number of buy to let in the development.
The businessman, who was all set to be in the penthouse for Christmas, said: “It is absolutely ridiculous. I could have understood if the lender had loaned an amount minus, say 10 per cent, but to not lend at all was very peculiar.
“I’m currently renting and the original idea was for me to be in the penthouse, which is very impressive, for Christmas so it is, of course, with very much disappointment that I’m having to stay put.”
He had taken a survey out on the penthouse, which has two bedrooms and a wrap around balcony, and after the mortgage lender declined, had at first started the process with another but then decided not to proceed.
“I got cold feet, if we have a no deal Brexit, it could seriously affect property prices and so after I couldn’t get the first mortgage, I thought I’m just going to wait now until after March next year.”
The case brings into focus the complex issue of mortgage lending on high rises. Interestingly, some lenders will not consider lending against any flat in a property over seven or 10 storeys high. Some lenders also do not like developments with a high level of rented occupation which they consider can result in block management issues and poor levels of maintenance and repair, which they fear could lead to an impact on values and re-sale prospects. Some lenders also do not want to lend on more than, say 10 per cent of the flats in one scheme,
Richard Aldous, head of new homes for Savills, selling Conisford Court, said: “It’s fair to say lenders are becoming more pedantic but this applies to all kinds of properties and not just apartments - for instance it can be an issue with, say, a large tree that might be next to a detached house. Out of the 26 apartments for sale at Conisford, only four are left, including the penthouse.
“We do have quite a few apartments bought with cash but we’d always advise a buyer shops around for the best lender who might not be offering the lowest rate but which doesn’t have such strict criteria.”
Keith Hood, financial advisor at Warners Financial Services in Wymondham, said: “I think the businessman was extremely unlucky. A lender turns down a mortgage based on what the surveyor says so the surveyor must really not have liked the development. By nature of it being a city centre development, it is going to be near a petrol station and other buildings so that seems absurd.”
Mr Hood said when he was obtaining a mortgage for a client, he would speak to the surveyor and ask them to look at the property online first to give an initial opinion and then approach different lenders, looking at their criteria.