Non-Standard Construction Mortgage
Morgan Stewart talks all about a non-standard construction mortgage.
What is not a non-standard construction mortgage and how do you identify non-standard construction?
Non-standard construction is essentially where a property is not built out of brick and slate. There was a massive building boom after the Second World War, partly to rebuild after the bombing in the country and partly through as a major social programme to knock down Victorian slums. So a lot of homes needed to be put up very quickly and cheaply. Councils up and down the country built modular housing, which is non-standard construction. There’s a huge amount of non-standard construction in the UK.
How difficult is it to get a mortgage on a non-standard construction home?
It depends on the type of construction – there’s huge variation. For example, one of the biggest types you’ll see is concrete build, where a property is built out of reinforced concrete. An Airey house is a common one, with posts and concrete panel construction.
These homes are now classed as defective. Inside this concrete is steel and some of the additives that went into the concrete can react with the steel, causing what’s called ‘concrete cancer’ where the walls literally crumble away. There can also be condensation problems. Generally you can’t mortgage these properties.
But what some people do is literally prop up the roof, take all the walls out and replace them with brick – creating standard construction. You see a lot of this in the area I live where there are old council houses in the countryside made from reinforced concrete panels. These are surrounded by million-pound houses now. People buy these properties with cash, and knock the walls out.
Another type of concrete build is Laing Easi-Form housing – you can get a mortgage on these – they’re fine. So it all depends on the type of build. Steel framed and also timber framed are also non-standard construction.
What does a prefabricated house mean?
It’s a bit like Lego – all the pieces have been built in a factory and then they just click together on site very fast, and very efficiently.
You see them often with McDonald’s restaurants – they’re built this way. I’ve seen a whole McDonalds building travelling on the back of a lorry.
Does it work the same if you want a Buy to Let property that’s non-standard construction?
It is exactly the same. As long as it’s not classed as defective by the Secretary of State under part 16 of the Housing Act 1985 England & Wales (unless repaired and certified under an approved scheme), you should be able to get a mortgage on it. There is a long list of acceptable property types on the UK Finance website.
Is a barn conversion non-standard construction or is it a new build?
It depends – barn conversions usually have thick walls and are stone built, so they’re usually standard construction.
How easy is it to get a mortgage with non-standard construction?
Again, it depends on the property. So for example with a Laing Easi-Form, these were constructed by pouring concrete in situ. Most high street lenders will give you a mortgage on this type of property.
British Iron and Steel Federation (BISF) houses are a steel construction. There are one or two lenders for these, but they have very high interest rates and low loan to value limits.
A lot of properties might fit on a standard mortgage, some will require a specialist lender and on some properties, no-one will lend at all.
What advice would you give to someone looking at a non-construction property?
If you’re looking at investing in non-standard construction property, look at the UK Finance website to see which types of properties are seen as defective.
But if you are in a very high value area where there’s defective housing, don’t discount that property. You might be able to buy at such a discount that you could fix the problems and create a high-value home quite cheaply. You can take defective walls out and rebuild in brick and block.
So don’t disregard a defective, non-standard construction if you’re a developer or if you’re an investor – it might be a good buy. Just do your numbers and make sure that the end value is more than your total spend.