Ex-Council House Mortgages

Looking to purchase an ex-council house? We’ll explain how to get a mortgage on these types of properties, the pros and cons and more, in our guide.

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Ex-council houses can be a great way for people to get onto the property ladder at a lower price point. These are houses that were originally built as council homes and have later been bought privately. Most ex-council houses were purchased through the Government Right to Buy scheme. They could have had several previous owners since then, or they could have been inhabited by one occupant pretty much since they were built. There are many different types of houses like this available, such as houses, maisonettes, flats and bungalows.

These properties are often fairly sizeable with multiple bedrooms. They are usually located in areas close to useful infrastructure and amenities such as schools, transport links, and more. However, there are some issues when it comes to getting a mortgage for this type of house. This guide will tell you everything you need to know about how to get an ex-council house mortgage.

Can You Get Mortgages for Ex-Local Authority Houses and Flats?

Yes, you can typically obtain mortgages for ex-local authority houses and flats. Many lenders offer mortgage products specifically designed for purchasing ex-local authority properties. However, lenders may have specific criteria or requirements for financing such properties, such as minimum property condition standards, lease length, or the percentage of privately owned units within the building.

While you can get a mortgage on this kind of property, but there are some extra difficulties you might have to overcome. Typically, there are a lot of factors that could make an ex-local house or flat difficult to mortgage. Of course, you might not find that these factors come into play in the specific property you’re looking at.

Working with experienced mortgage brokers like John Charcol can also help you navigate the process and find suitable mortgage options for ex-local authority properties.

Why Don't All Mortgage Lenders Offer Mortgages for Ex-Council Homes?

The usual reasons that mortgage lenders are hesitant to offer mortgages for these homes are:

Undesirable Areas: Some ex-council homes might be in areas that are heavily developed, areas with higher crime rates, or areas where there are fewer local amenities.

Necessary Repairs – If the property was recently a council home, there might be some repairs that are still needed on the house.

Non-Standard Construction Types – Concrete and steel-framed homes are difficult to get a mortgage on. Many ex-local authority properties are considered non-standard construction buildings.

All of these factors can make the property harder to sell. In turn, this means that a lot of mortgage lenders will be more reluctant to make an offer to buyers. Mortgage lenders and banks need to make sure that they’re protected from the risks associated with a borrower failing to pay off their mortgage. This means that the lender has to be able to sell the property without too much of a delay. In particular, non-standard construction homes can be difficult to get a mortgage for.

What Are Non-Standard Construction Homes?

Non-standard construction buildings are made using materials or methods that are now considered unsafe or unlikely to stand the test of time. This can include concrete and prefabricated houses, and houses with steel or timber frames. These houses are considered a risk to the mortgage lender in the event of repossession. This is due to a concern around the structural integrity, and a potential drop in market value.

It’s worth noting that not all non-standard construction types are the same. Some have a vastly shorter or longer expected lifespan than others. As a result, the difficulty of getting a mortgage on non-standard properties is hard to predict until a survey has been conducted to find out the type of construction that was used.

Are All Council Homes Non-Standard Construction?

No, not all council houses are made from unusual building types. In fact, most council properties will be a more common and standard type of house.

A lot of non-standard construction types were used to produce cheap, quick to erect homes during the housing crisis that followed the second world war. A lot of these affordable houses became council homes. This ultimately means that there is a higher chance of ex-council houses being non-standard construction type properties.

Are Mortgages for Ex-Council Flats Different?

There are several factors that make it harder to get a mortgage for an ex-council flat. The issues to look out for include:

Other Owners in the Building: Some mortgage lenders prefer to only offer mortgages for ex-council flats where the majority of other flats in the building are privately owned. This is due to concerns over maintenance issues, and the difficulty of selling a flat surrounded by council flats.

High-Rise Flats: While low-rise blocks of flats might be simple to mortgage in the right conditions, many lenders will refuse mortgages for ex-council flats that are higher than five or six storeys. This is because high-rise flats often have higher maintenance costs, and if these costs are not met, the flat’s value will reduce. This reduces the worth of the lender’s security, increasing the risk of the loan.

Studio Flats: Some mortgage lenders aren’t likely to offer a mortgage on a studio flat where the living area and kitchen area are combined. This is due to the difficulty reselling this type of property, as well as the increased fire risk in this type of home.

Cladding Types: This is particularly a problem since the Grenfell Tower tragedy. Most mortgage lenders will refuse mortgages on buildings with cladding that has not been approved by a professional surveyor. Some cladding types are refused altogether.

Communal Areas: This is less of an issue presently, but some lenders are hesitant to lend on properties with communal walkways as this can be seen as a security risk.

Typically, none of these issues would be a deal-breaker in getting a mortgage individually. Combined with the other problems related to ex-council homes, you might find it difficult to secure a lender. If you’re looking at buying a property that falls under these risk categories, you may find that your mortgage options are very much limited.

What Are Some Advantages of Ex-Council Houses?

Despite the difficulty in getting mortgages, there are plenty of reasons why people choose ex-local authority homes.

Value for Money: The biggest savings come from the Right to Buy policy, where residents of council houses can buy their council property. This offers significant savings over privately owned houses. Even if you’re looking at buying an ex-council house from another private owner, you’ll still find that these properties will often be cheaper than comparable properties in the area.

Size and Space: Since most council houses were built for families, you’ll often find that the properties are more spacious than other properties in the area. Many council houses also have gardens or outside areas, which can be a huge appeal to buyers.

You do have to consider the fact that you might get a worse deal overall on your mortgage on an ex-council house. Using a mortgage broker can help you get better deals than you might by yourself.

What Are Some Disadvantages of Ex-Council Houses?

As well as the trouble getting a mortgage, there are other reasons that some people choose to stay away from ex-council homes:

Location – while ex-council homes are typically in areas with enough amenities, you will often find that they are not in the most desirable areas. They will have been built where land was relatively cheap, meaning that they will often not be in city centres or in popular suburban areas
Renovations and Upkeep – since many council properties were built between the 1950s and the 1980s using cheap construction methods, these homes often have significant upkeep costs if something goes wrong
Lack of Space for Extensions – ex-council properties were usually built in close clusters, where maximising the efficiency of the space was a concern. So, there’s often not much room to build an extension. This, in turn, lowers the opportunity for increasing your property’s value
Stigma – there is an undeniable stigma around council houses, even privately owned ex-council houses. This may upset some people who live in these homes. It can also make it harder to sell your property if you wish to move

However, these disadvantages have to be weighed up against the overall lower purchase price, and the fact that you can usually get more home for your money than you might otherwise be able to.

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How to Get an Ex-Council House Mortgage

Getting a local authority home mortgage can be more difficult than getting a mortgage for a normal property, but it’s not impossible.

To obtain a mortgage for an ex-council house, you would typically follow the same process as applying for a mortgage on any other property. Start by researching lenders who offer mortgages for ex-council properties, as some may specialise in financing these types of homes. Be prepared to provide details about the property, including its location, condition, and any relevant documentation, such as the leasehold agreement. Additionally, ensure your financial documents are in order, including proof of income, employment history, and credit history.

If you want to make sure to get the best deal, you could look at finding a mortgage broker like John Charcol, who specialises in ex-local authority houses and flats.

What Are the Criteria for an Ex-Council Home Mortgage?

Criteria for obtaining a mortgage on an ex-council home typically involve factors such as the property’s condition, location, leasehold terms, and the borrower’s financial standing. Lenders may assess the property’s value, lease length, and any restrictions on resale or occupancy. Additionally, borrowers need to meet standard mortgage criteria, including proof of income, employment stability, credit history, and affordability assessments. The exact criteria will depend on the mortgage provider. Most lenders and banks will list their criteria on their website or when you visit banks in-branch. However, there are some criteria that remain the same wherever you’re applying for a mortgage. For example, you’ll need a high income-to-debt ratio in order to borrow enough money to purchase the property, as well as a good credit score. Mortgage lenders require higher income levels from people wanting to buy a non-standard construction property or other risky properties.

What Deposit Amount Will I Need?

Due to the risks that the mortgage lender faces when providing a mortgage loan on an ex-council property, you might find that they require a higher deposit amount than usual. Most lenders will offer mortgages with as little as a 10% deposit, or sometimes even a 5% deposit. If your chosen home has additional problems, like those listed above, you may have to provide a higher deposit. For example, a flat of this type could easily have a minimum deposit requirement of 15%.

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Are Ex-Council Properties a Good Investment?

Ex-council properties can be a very sound investment, depending on your goals and the specific property in question. These homes are often more spacious and solidly built than newer equivalents, and they tend to be more affordable, which can make them appealing to both first-time buyers and investors alike.

From a rental perspective, ex-council properties can offer good returns, especially in areas where there is strong demand for housing. Their lower purchase price can also mean a better yield compared to similarly sized properties in the private sector. In some cases, they are located in areas that have seen regeneration or are close to transport links, which can add long-term value.

That said, it is important to do your research. Some ex-council homes may be in buildings that are harder to mortgage or may carry higher service charges, particularly in high-rise blocks. Others may have restrictions around resale or come with certain legal considerations. As with any investment, the key is to weigh up the risks and benefits carefully, and ideally to get advice from someone who knows the local market well.

Can I Buy my Parents Council House?

Yes, in many cases you can buy your parents’ council house, but there are a few conditions that need to be met. If your parents were eligible under the Right to Buy scheme and had lived in the property as council tenants for a number of years, they may have been entitled to purchase it at a discounted price. The size of the discount usually depends on how long they had been tenants, with larger reductions available to those who lived there for decades.

If your parents have already passed away and the property is still council-owned, you would not be able to purchase it under the Right to Buy scheme unless you also lived there as your main home and met the eligibility criteria yourself. In such cases, the local council would need to assess your circumstances. If the property was already bought by your parents under Right to Buy and is now part of their estate, then it could potentially be passed on to you through inheritance, and you would own it outright once probate is completed.

While there are no automatic discounts for inheriting a council property, the original Right to Buy discount, if it was applied when your parents bought the home, can be a significant financial benefit.

Insurance

Having suitable home insurance is a requirement for getting a mortgage. It’s worth bearing in mind that your insurance might be higher than other similar homes if you want to buy any house with non-standard construction, or if your property is particularly old. If you have a shared access way in a flat, this could also increase your insurance cost due to the additional security risk and higher risk of vandalism. This would likely increase your contents insurance price, which is not necessary for most mortgages, but it’s another factor to consider.

Can First Time Buyers Get a Mortgage for an Ex-Council House?

First time buyers will usually not face too many additional problems when trying to get a mortgage for an ex-council house or flat.

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Things to Check Before You Apply for a Mortgage

Before you or your mortgage broker start looking for mortgage options on your chosen property, there are a few things to consider:

Check Who Owns the Freehold

For a lot of ex-council properties, the council could still be the freeholder of the land that the property is built on. If so, you could end up having mandatory service charges to pay the council. This should be considered alongside your monthly mortgage payments to make sure you can afford both. There are many properties where the freehold is privately owned.

Get a Survey Done

You should always get a surveyor’s assessment of any property you intend to buy. While surveys are often completed on houses during the sale, you might want to consider getting your own survey done. If so, you should find someone with experience in assessing ex-council houses. Or, find a surveyor with experience in the particular type of property you’d like to buy, such as flats, non-standard construction units, or older houses. This will help you identify the maintenance risks you could be facing after you buy the property, which will again lower your ability to keep paying the mortgage.

Research the Local Area

One of the main reasons that you could struggle to sell an ex-council house is the local area. You should always look at statistics and the amenities of the local area. Things to look out for include poor market demand, fly-tipping, vandalism, and neglected upkeep of public areas. All of these could lower your property’s value after you buy it and you could end up trying to see the house at a loss further down the line. Of course, if you intend to never leave the property, this could be less of an issue.

Ex-Council Property Mortgage - The Takeaway

Old local authority buildings can be attractive purchase opportunities for a lot of people due to the comparatively low cost and relatively high amounts of space you get in these homes.

When people are looking at buying ex-local authority houses, there are some issues to consider. Non-standard construction and flats with common areas or studio-flat living areas can be harder to get mortgages for due to the higher risk of prices dropping, and the difficulty to sell these properties. This makes protecting your home more important in these cases. See our house buying guide for more advice

If you’re looking at getting a mortgage for a property like this, you should consider using a mortgage broker who has experience in this type of property. Regardless of what type of ex-council home you intend to buy, and whether or not you are using the Right to Buy scheme. Here at John Charcol, we have experienced brokers who can help you find a great mortgage deal. Get in touch today to see how we can help. We have years of experience in helping buyers secure specialist mortgages to suit their needs.

Couple Smiling And Showing Off Their New House Keys