The difficulty of getting a mortgage for a high-rise property

With the seemingly ever-growing demand for space in UK cities, it’s no surprise that many new builds are going skywards.

Although many people now live in high-rise apartments and flats, you might find it difficult to get a mortgage for a flat in a building that’s more than five storeys tall.

Recovering from the financial crash

The main reason for lenders being cautious around mortgages for high-rise buildings is down to events that happened in the run-up to the financial crash in 2007.

In the years leading up to this point, many high-rise flats and apartment blocks were built, and there were lots of people who took out mortgages to invest in some of these flats to let out. However, because there were so many high-rise buildings, and there was very little demand or interest from the public in certain areas, these investors couldn’t repay the mortgages they owed on the flats.

This was a big factor in prices collapsing, and many flats dropped in value by a huge amount. Lenders are still yet to fully recover from this, which is one of the reasons you may find it tough to get a mortgage on a high-rise.

The condition of the building

The quality of communal areas also seems to have an influence on whether a lender allows you to take out a mortgage for high-rise properties.

As the communal areas of a flat or high-rise apartment block are out of the homeowners’ control, it means the lender has little say on how they may affect the property’s value. For example, if the communal lift or hallways are neglected in a block of flats, this might put buyers off, even though it is not the responsibility of the people who live there.

Another issue for lenders is with blocks of flats that are ex-local authority properties (meaning they used to be owned by the council).

As these buildings often house many properties and reach to over 20 storeys, some lenders simply refuse to lend to anyone looking to purchase a flat in one of these blocks. Others may be more accepting, but as there are only a few that do offer mortgages for this, they may turn some buyers away if they have already lent to a certain number of people living in that block of flats.

Meeting a lender’s height requirements

Depending on the lender, you may be restricted in the kind of flat you can take out a mortgage on.

Some lenders may have rules in place that say they only lend to you if you’re buying a property in a block of flats that’s no more than 10 storeys high. Others say the block must be shorter than this, while a handful of others accept higher builds.

On the other hand, a few lenders don’t have a particular height restriction in place, but instead base their decision on the valuation.

Different rules for London

As is perhaps to be expected, the rules are slightly different in London.

Because it’s such a densely populated city, many of the properties in the capital are high-rise, which means lenders have relaxed the rules a little more. That’s why you may have more luck getting a mortgage for high-rise properties if you live here, where other destinations in the UK have strict restrictions.

For example, you might find no maximum height restrictions with certain lenders if the property is in London, and other mortgage providers may accept much higher buildings than elsewhere in the UK.

You may need specialist buildings insurance too

If you’re looking to buy a high-rise property, it’s worth bearing in mind the issues you might encounter when looking for a mortgage. Unfortunately, that’s not all, as getting your home insured can be more difficult too.

A high-rise property is classed as a non-standard build, which means you’ll need to look for a specialist insurance policy.