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  1. #1

    Ask The Property Geek!

    To kick the forum off, I'll be around all day answering any questions you've got. I can't promise a great answer, but I'll do my best!

    So fire away...

  2. #2
    I usually invest pretty close to home and a lot of the really great deals seem to be on ex-Local Authority houses which I think make good rentals because the bedrooms and gardens are usually quite generous in size. (As an example, you can get a 3 bed semi here for 60,000 and get a monthly rent of 450-500.)

    The only thing is, is that a lot of these properties are classed as "non-standard construction". One in particular is classed as "prefabricated". They are mortgageable (albeit with only a few lenders) but I'm worried about how easy they'd be to sell on if I needed to do so. I've asked a few of the local agents and they don't seem particularly clued up on it.

    Have you had any experience with non-standards? And would you risk buying one? Thanks

  3. #3
    Good question, with a not so good answer: "no", and "not sure"!

    Basically you're going to be restricting the pool of people who you can potentially sell to - which will already be somewhat restricted, because a lot of residential buyers might want something "prettier" than an ex-LA house. That means you'd be more likely to sell to a fairly clued-up investor, who is going to give you a hard time on the price!

    So the key would be to make sure you never have to sell in a hurry: make sure you've got ample cash reserves and cover in place so you're not forced to make a quick sale and take a hit on the price.

    The other factor is whether there will be any problems with you re-financing in the future - you don't want to get stuck on a nasty SVR if lenders suddenly decide they don't want to lend on non-standard construction.

    I'm not too clued up on it, so your best bet would probably be to speak to a mortgage broker and get their take on it, then weigh up the risk against the reward (10% gross yield!).

    If anyone else knows something about this area, feel free to chip in!

  4. #4
    Long answer....

    Mark - I would second Rob's advice of speaking to a mortgage broker regarding their view on non-traditional houses, but I would add that it is the buildings insurance that would be of more concern to me. Everything is insurable - for a price - so it may be worth doing some research around this point.

    The issue tends to stem from insufficient protection of the structural reinforcements which results in damage and weakening of the concrete load bearing elements. Mortgage lenders and insurers like to cover themselves so will put up barriers for anyone interested in this type of property even if there is no specific cause for concern. Concrete Society Advice note 35 if you're really bored....

    As part of your 'Team of Professionals' I would include a decent surveyor (yes I am bias), however if you speak to a local surveyor or structural engineer, they will likely be able to tell you what pre-fab type is generally found in the areas you are looking, whether or not they are on the Housing Defects Act 1984 list and if they are whether the majority of them received work under the 'PRC certificate'.

    Personally I took the view that I was getting the property at a good price and could rent at a premium due to the size of the rooms etc. I had a structural survey carried out to satisfy the mortgage requirements as well as my own peace of mind. I didn't have any issues with getting the mortgage, but did have to pay more for the building insurance.
    I have subsequently sold this property and sold it for probably a little bit less than I could have done had it been traditional construction, but percentage wise I bought for a bit less and sold for a bit less so was no worse off for it.

    Would I buy one now - probably not, as I am looking for properties I can hold for the next 50+ years with minimal turnover of stock.

  5. #5
    We've had this issue in Liverpool too, as the authorities very rapidly built a large number of huge family homes after the war.

    The lenders were fine with it after a lot of back and forth. The main issue was actually getting the correct buildings insurance.

    The lenders were happy once the insurance proposal was accepted. That's their only issue at the end of the day really, although they may down-value the property upon valuation to reduce their exposure should it get repossessed.

    If these types of properties make up most of the properties in a particular area, it shouldn't affect prices too much as everyone will be in the same boat.



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