Lending Policy Changes 18/05/2020

Following a review of our lending policy, we’re making changes to the following areas effective from Monday 18 May 2020.

Ground rent

Ground rent is permitted subject to:

• Ground rent at the start of the lease not exceeding 0.1% of the property value or £250 (£1,000 in London)
• The amount and terms of any periodic increase are clearly stated and comply with the following requirements:
• RPI linked
• Ground rent increases no more frequently than every 10 years
• Doubling of fixed amount increase
• Ground rent increases no more frequently than every 20 years

Estate rent charges

Estate rent charge is permitted where any one of the following apply:

• The agreement must specifically prohibit the collector/recipient of the rent charge from being able to create a lease over the property
• The agreement includes a mortgagee protection clause, which requires the rent charge owner to give a mortgagee at least 2 months’ notice prior to any enforcement action being taken by the owner of the estate rent charge
• The owner of the estate rent charge is a management company comprising of the residents, who are the shareholders of a private freehold development

In addition, the following policy still applies for estate rent charges:

• The current annual amount payable under any rent charge must not exceed £500 in present value
• The rent charge must not be capable of escalating such that the amount more than doubles every 20 years

New Build

New Build is defined as all properties that have been completed or converted in the last 24 months, or first occupation.

Flats (including studio flats)

• Flats ≤ 5 storeys subject to acceptable property type, valuation and LTV (number of storeys assessed from ground level – clarified)
• All flats in blocks > 4 storeys require lift access (number of storeys assessed from ground level – clarified)
• Masonry outer leaf required
• No evidence of potentially combustible materials

Security above or adjacent to commercial premises

The following commercial uses are not permitted

• A3 – restaurants and cafés
• A4 – drinking establishment
• A5 – hot food takeaway
• Sui Generis – commercial of its own kind e.g. scrap yard, petrol station, nightclub, laundrette

Roof type

• Flat roofs clad with copper, lead, zinc, asphalt are considered acceptable as are other modern materials which carry a minimum 25 year guarantee
• Mineral felt flat roofs tend to have shorter lifespan and are acceptable for formers and extensions but not where they form 100% of the total roof area of the property.

Construction types

Timber framed property

• Post 1965 timber frame external skin is predominantly masonry

Modern steel frame permitted with a predominantly masonry outer leaf, subject to:

• BOPAS or similar accreditation
• Local authority approvals
• NHBC or similar ten year new build warranty
• BBA/BRE certificates (frame and cladding)

Steel frame

• Pre 1990 flat subject to valuer comments
• Post 1990 houses are acceptable

Prefabricated concrete system, properties will be considered where:

• Supported by the valuer; and
• Repaired under an approved scheme; and
• Where the immediately adjacent property has also been repaired.

To be acceptable there must be either a PRC Home Ltd certificate or confirmation by a civil or structural engineer that the repair scheme was licensed by PRC Home Ltd prior to its demise in September 1996.

Our updated Lending and Security guidelines are available from Monday 18 May 2020.