Property criteria

Property concentration exposure limits

The Mortgage Works will consider its overall exposure by applicant, geographical area and development when assessing applications. These exposure limits are per applicant and the number of units include securities mortgaged to other lenders and/ or unencumbered properties. The maximum concentration that can be considered per development is:

Development Size/Road Maximum Concentration
1-3 Units 1 Unit if a purchase application.
  • For remortgages we can consider up to 3 flats, in a block of no more than 3 flats, providing the applicant has owned each of their flats for at least 12 months.
4-20 Units 25%, rounded down to the nearest unit
21+ Units

Maximum of 10 in a postcode up to the first digit of the second grouping (e.g. BH2 6)
Up to 5 in the exact postcode (e.g. BH2 6EP)


Scheme abuse

The Mortgage Works customers aren’t allowed to live in the Buy to Let property at any time and will be in breach of the terms and conditions of the mortgage contract should they choose to do so. Where this is the case, The Mortgage Works's policy is to give the customer a period of time in which to vacate the property, or instead remortgage to a residential loan. If a customer fails to comply with these terms, this may lead to legal action being taken against them, which could ultimately result in The Mortgage Works taking possession of the property.


Minimum property value / purchase price

£50,000 (apart from HMO which will need a minimum property value of £100,000).


New Build buy to let applications

New Build flats and houses are defined as:

  • A house/flat built within the last twelve months
  • A house/flat built over twelve months ago but still owned by the developer
  • A house/flat built over twelve months ago but the first purchase/legal completion of the property was less than twelve months ago
  • Applications for New Build flats accepted up to a maximum of 65% LTV
  • The Mortgage Works instructs its valuers to value all new properties (flats, houses and maisonettes) on an 'as new' basis

If new, or built within 2 years, the security must have a warranty guarantee. The Building warranties we'll accept include:

  • NHBC
  • LABC
  • Build-zone
  • Premier Guarantee
  • One Guarantee
  • ABC+
  • Build Assure (New Home Structural Defects Insurance)
  • Checkmate's Castle 10 (where out buildings such as a detached garage are also being constructed, an endorsement to include these in cover is required).
  • Global Home Warranties (Structural Defects Insurance)
  • The Q Policy for Residential Properties
  • The Q Policy for Bespoke Properties - detached only
  • International Construction Warranties (ICW)
  • Ark Residential New Build Latent Defects Insurance - where a detached garage/outbuilding has been constructed at the same time as the main building, the policy must include an endorsement confirming cover for the detached garage/outbuilding.
  • Advantage - there must be no more than ten units in any continuous structure
  • Aedis - there must be no more than 20 units in the structure.
  • BLP - formerly known as Building Life Plan (excluding self builds under construction). These policies are underwritten by Allianz Global but written by BLP.
  • Protek
  • Professional Consultant's Certificate issued by an architect/surveyor. The Certificate is checked by the solicitor and must comply with the requirements of the UK Finance Lenders Handbook.
  • CRL new build 10 year structural defects insurance policy for residential property*.

*The Mortgage Works will only accept a CRL new build 10 year structural defects insurance policy in the following circumstances:

  • The final certificate is dated 04/09/2019 or earlier, and the underwriter is International General Insurance Company (UK) Ltd (IGI) or CGICE
  • The final certificate is dated 05/09/2019 or later, and the underwriter is International General Insurance Company (UK) Ltd (IGI) and the final certificate has been signed by Ark Insurance Group Ltd. Arks final certificates are titled: ‘10 year Structural Defect Insurance Policy’. All final certificates signed off by Ark are proof that the warranty is acceptable.

We won't accept the warranties in the following circumstances:

  • On New Build properties underwritten by Alpha.
  • On second-hand properties being sold by first or subsequent owner and properties under two years old, with the warranty underwritten by Alpha.

If another building warranty has been issued that's not listed above or you have any questions, please contact us on Broker Chat.


New Build property lease terms (includes office conversions)

  • Minimum acceptable lease term on New Build properties is 125 years for flats and 250 years for houses.
  • Maximum starting ground rent on all New Build properties with a leasehold tenure is limited to 0.1% of the property value.
  • Ground rent must be reasonable at all times during the lease term. For example, ground rent escalation should be linked to RPI (Retail Price Index) or a similar index, and unreasonable multipliers of ground rent will not be permitted, for example doubling every 5, 10 or 15 years.

New Build Estate Charges

  • Estate Rent Charges, or Estate Management Charges, can apply to freehold or leasehold properties.
  • Charges must be reasonable at all times. Where charges are greater than £500 per annum, we’ll need to be advised what the charges cover so the valuer can assess whether the valuation is affected.

Valuation criteria

  • Leasehold properties must have a minimum lease of 70 years at application.
  • The valuer must be satisfied that there is a market for any property taking the lease term into consideration.
  • Although an application may meet the guidelines above, the property may still be declined by the valuer, e.g. a mortgage application in England for a 20 year term with a 71 year unexpired lease is within policy, but the valuer may advise the property is not readily marketable and saleable and we will therefore not consider the property as suitable security.

Construction types

Traditional Construction

The following are regarded as traditional construction and normal lending terms apply:

Walls

  • Cavity outer walls of brick/reconstituted stone/block (including rendered walls) with inner walls of brick or block.
  • Timber framed property with outer walls of brick/reconstituted stone/block (including rendered walls), built 1970 or after.
  • Solid stone (eg limestone, granite).
  • Cob - or any regional variant (for example cobb, clom and Wychert).

Roof

  • Tile (concrete)
  • Slate
  • Thatch (reed or straw)
  • Felt, asphalt
  • Copper, lead

Non Traditional Construction

Many properties have been built using a variety of other construction methods. Lending terms vary depending on construction types and if a repair scheme, where appropriate, has been used. Where a property is of non traditional construction please contact your usual Service Centre with the following details for further advice:

  • The name of the type of construction
  • Year built (if known)
  • Flat/terrace/semi or detached
  • Details of any repair scheme if appropriate and if the scheme applies to the whole block (e.g. the whole terrace/both semi's)

The exact construction name is important as lending terms may differ between different types and year built. For example, our lending terms differ between Gregory, Gregory Drury System 3 and Gregory Housing. All three have different lending terms and it is important to ensure you give us the full and accurate name to avoid us giving inappropriate advice.

Modern Methods of Construction

We're supportive of development schemes which incorporate Modern Methods of Construction (MMC), although an MMC scheme must display sufficient robustness, technical rigour and suitability for its location. Due to the wide and constantly changing range of products in the market, each development (not system) is treated independently. Please provide the information below to enable us to consider your development fully:

  • Principal construction materials - e.g. steel frame, timber frame, CLT (Cross Laminated Timber)
  • Details of the roof and wall finishes - please also provide confirmation/evidence of their British Board of Agrément (BBA) or similar accreditation, which should be for a minimum 30 year lifespan (to include fixings)
  • Warranty details - this should be a mainstream warranty accepted by TMW (preferably “NHBC Accepts”). We also require confirmation as to whether the system has Buildoffsite Property Assurance Scheme (BOPAS) accreditation
  • Any available site specific information regarding the development.

Lease terms

  • We expect a minimum lease term of 70 years. If the lease term is less than 70 years, the broker must confirm at application that this will be extended on or before completion. In order for the application to proceed and for the property to be valued we'll need confirmation from the solicitor of the following, which will be requested after submission of the application:
    • Confirmation the applicant(s) owns, or is intending to purchase the Freehold Title, OR
    • If the applicant (or the seller as part of a purchase) is extending the remaining lease term, please provide a letter from the solicitor on letter headed paper confirming:
      • Length of lease (years)
      • Date of commencement of lease
      • Ground rent (£ amount)
      • Ground rent review frequency
      • Ground rent increase methodology (e.g. RPI linked)

The valuer must be satisfied there is a market for any property, taking the lease terms into consideration.

  • Please note that there are different limits for acceptable New Build lease terms – see New Build property lease terms above for details
  • Where the valuer believes marketability will be impacted by the lease terms, they may reflect this in their valuation, e.g.
    • Where ground rent escalation is linked to the value of the property or an index greater than The Retail Price Index (RPI)
    • Where lease clauses appear onerous, e.g. disproportionate service charges or event clauses for normal use, such as installing an aerial
  • Some lease terms will impact marketability so severely they will always result in the property being declined, e.g
    • Where ground rent is greater than or equal to 0.5% of the property value, or where the review period is less than or equal to 5 years.
    • Where ground rent doubles in less than 20 years (e.g every 5, 10 or 15 years) or escalates by compounded RPI

These examples aren’t exhaustive, and the solicitor is expected to refer back to us any lease terms they feel may affect the value or future saleability of the security.


Estate Charges

  • Estate Rent Charges, or Estate Management Charges, can apply to freehold or leasehold properties.
  • Charges must be reasonable at all times. Where charges are greater than £500 per annum, we’ll need to be advised what the charges cover so the valuer can assess whether the valuation is affected.

Purpose built flats and studio flats

The internal floor area must be no less than 30 square metres. Studio Flats must contain a separate bathroom.


Properties next door

Applications where the proposed security is attached to a property owned by the applicant i.e. terraced or semi-detached are subject to the following criteria:

  • New purchase applications are not accepted
  • Remortgage applications for either / both properties are acceptable subject to the applicant having owned and rented both properties for a minimum of 12 months
  • Maximum of 2 attached properties that are owned by the applicant (3 or more attached properties in a row are unacceptable)
  • The Property cannot be adjoining to the applicant's main residence (where owned).

Property developers

  • Property developers (for example, a person who owns 25% or more of a business whose principal activity is property development) are not accepted
  • Applications for properties that have been built or converted by an applicant who isn’t a property developer can be accepted, providing the property is fully complete and will be let on completion.

Local Authority flats

We won’t accept former local authority flats in blocks of more than five storeys. This also applies to maisonettes and Scottish tenements in blocks of more than five storeys that were, or still are, in local authority ownership.


Fire safety assessment

An industry-wide form has been released to assist in the assessment and valuation of flats in multi-storey buildings or where specific fire safety concerns exist. This involves a fire safety assessment to be conducted by a qualified professional, which will provide a clear ‘safe’ or ‘unsafe’ certificate and speed up the ability for low risk buildings to be checked by specialists, enabling quicker transactions. This form has been endorsed by the Royal Institution of Chartered Surveyors, UK Finance and the Building Societies Association and is known as the External Wall Fire Review form (EWS1)

Recent guidance from the Ministry of Housing, Communities and Local Government (MHCLG) advises that fire safety must be considered holistically on any multi-storey or multi-occupied building irrespective of height.

We're adopting the use of the EWS1 form with immediate effect and will instruct valuers to consider its use:

  • where there are external wall system concerns in multi-storey/multi-occupied buildings
  • where there are attachments e.g. balconies considered to represent a fire risk OR
  • where there are any other significant fire safety concerns.

Valuation process

Where a Valuer has fire safety concerns with a building, they’ll decline the property pending receipt of the EWS1 form

The form must be:

  • obtained from the building owner (property owner in Scotland). The ‘Client organisation’ on the form must be the building owner and won’t be accepted in the name of the applicant/client.
  • fully completed and accompanied by a letter (on headed paper) from the signing firm which details their area of business, qualifications and confirms they completed the form.

It's the responsibility of the building owner to ensure the signing firm is a member of one of the appropriate professional bodies detailed in the MHCLG guidance.

The specialist will complete the form and select either ‘low risk’ or ‘high risk’ and will then choose a rating of either:

  • A1, A2 and B1 - we’ll send the form to the valuer for assessment and where acceptable they’ll provide an amended valuation report.
  • A3 or B2 – we’ll assess the case and let you know our decision. We may request confirmation from the building owner about the remedial building work required and who’ll be liable for the cost of those works. For Scotland, confirmation will be required from the building factors/managing agents acting for the co-proprietors.

Where remedial costs will be covered by the building owner:

For all application types, we’ll require confirmation in writing from the building owner that:

  • the EWS1 requirements will be complied with and the building rendered fire safe (i.e. fall within the definition of A1, A2 or B1) on completion of the remedial works
  • the interim fire safety measures are satisfactory
  • no costs or hidden charges will be passed onto the leaseholder (e.g via service charges)
  • remediation will take place within a reasonable timescale (c12 months).

Where remedial costs fall to individual leaseholders/flat owners:

For remortgage and purchase, we’ll consider applications where remedial works have already been paid for and planned/started if the building owner’s solicitors confirm in writing that remedial works have been paid for and planned/started. We’ll decline any applications if remedial works have not yet been paid for or planned/started.

For further advances, we’ll consider applications if the funds are being raised to carry out the required remedial works. Further information will be required from the building owner in order to make an assessment, including:

  • the EWS1 requirements will be complied with and the building rendered fire safe (i.e. fall within the definition of A1, A2 or B1) on completion of the remedial works
  • confirmation the interim fire safety measures are satisfactory
  • a summary of the remedial works required and when the works will take place
  • costs the leaseholder/flat owner is liable for and when the funds are required/due to be paid to the freeholder.

New Build

On 21 December 2018, The Building Regulations 2018 banned the use of flammable materials on new high-rise homes. Any buildings started after 21 February 2019 should not contain flammable material.

An EWS1 form is required for any New Build designed/constructed under the old regulations (regardless of storey height) if there are concerns around for example wall systems and attachments.

However, we won’t require an EWS1 form for New Builds that have been/are being constructed in compliance with The Building Regulations 2018 (unless upon inspection, the valuer has concerns regarding other elements of fire safety).

If after speaking to the Developer/Sales Agent, the valuer can’t confirm that the latest Building Regulations apply, the mortgage valuation report will be declined pending confirmation from the Building Owner/Developer/Conveyancer as to whether it’s compliant with The Building Regulations 2018. 

Scotland and Northern Ireland

Whilst the MHCLG guidance only covers England and Wales, we’ll also be adopting the same approach for Scotland and Northern Ireland due to the importance of fire safety.