The Intermediary – December 2025 - Flipbook - Page 78
B RO K E R B U S I N E S S
Case clinic
C AS E FOU R
New-build flat with high
service charges
first-time buyer hopes to purchase a newbuild flat for £300,000 with a 10% deposit.
The annual service charge on the flat is
£3,600, and there is also a ground rent of £350
per year. Although the buyer earns £45,000 and
passes initial affordability checks, some lenders
reduced maximum borrowing due to the high
ongoing charges. Others raised concerns about
resale value and potential cladding risks, even
though the building is EWS1-compliant.
A
in blocks of flats with more than six storeys,
regardless of which floor the proposed security is
situated on.
TOGETHER
Together could support this applicant with a
maximum 75% LTV mortgage, assuming it is of
standard build and not more than six floors. If
this was the case, it would be considered ‘nonstandard’ and capped at 65% LTV.
If the building has a valid EWS1 we could look
to lend on it, but would require comments from
a valuer to evidence this and would use these
comments as our basis for the LTV. We would
work the service charge and ground rent into
affordability, and if this passes the affordability
check we could proceed.
UNITED TRUST BANK
UTB requires the ground rent to not exceed 0.1%
of the market value, but will consider up to 0.2%
on referral prior to submission. This particular
example would require a referral. If approved,
the monthly value of the combined ground rent
and service charge at application will need to
be factored back into the monthly affordability
assessment. If in the view of the surveyor an EWS1
form is required, the cladding must be of A1, A2
or B1 standard for us to consider lending. Further
questions may arise if the resale value is more than
10% different to the market value.
HARPENDEN BS
We do not have a maximum service charge or
ground rent amount. Instead, we are led by our
valuers on whether the property is deemed to be
suitable security. This also applies for re-saleability
and EWS1 concerns. Please note, our maximum
LTV is 85%.
BUCKINGHAMSHIRE BS
The society would not seek to reduce the loan
amount if the affordability assessment supports
the requested level of borrowing. However,
the annual service charge may be considered
excessive, and this could impact the society’s
willingness to lend. In such cases, we would refer
the matter to the valuation company for their
opinion prior to issuing decision in principle (DIP).
The valuer would confirm whether the property is
deemed suitable for lending.
If the valuer indicates that an EWS1 form is
required, this must be provided. Additionally, the
society is unable to lend on properties located
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The Intermediary | December 2025
C AS E F I V E
Buy-to-let flat above
commercial premises
potential client is purchasing a £185,000
flat above a takeaway, using a 25%
deposit. They own two other standard
buy-to-lets, both in suburban locations. The flat
is in reasonable condition with a 78-year lease
remaining. Expected rent is £750pm, and the
property is close to a university, attracting student
tenants. The applicant has had some issues in
securing a loan as some lenders had worries
regarding the resale value, given the commercial
premises below the property.
A
FLEET MORTGAGES
Our minimum lease requirement is 75 years at
completion, with at least 50 years remaining at the
end of the mortgage term. For this property, that
would mean a maximum term of 27 years. Where
a property is over or adjacent to commercial
premises, we require a minimum property value
of £100,000. We could consider this application
subject to a valuer’s confirmation that the
commercial element does not negatively impact
the proposal. Student tenants are also acceptable
to Fleet.
FOUNDATION HOME LOANS
We could consider this case within our Property
Plus range, which is designed to provide finance on
more complex and specialist property types.
