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Mike Haupt – Mortgage Adviser
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Listed Building Mortgage
Mike from Tomorrow Mortgages talks us through a listed building mortgage.
What is a listed building?
I’m going to get a little technical and read the definition of a listed building: it is a building that has been judged to have a national interest in the UK. These buildings are listed on the National Heritage list and are protected under planning laws.
There are three different types of listed building, grade I and two types of grade II. A grade I listed building is a ‘building of exceptional interest’. One of the grade II categories is a building of ‘particular special interest or national importance’ and the second one is ‘special architectural or historical interest’.
Any work that is carried out on a listed building needs permission from the local authority.
Is it hard to get a mortgage on a listed building? Is it difficult to get a mortgage on a grade I or grade II listed building?
The good news is no, it’s not difficult. I’m really fortunate – I live in a grade II listed cottage, so I’ve been through this process relatively recently.
With any listed building there are a few lenders that give a blanket no: they just don’t lend on anything of non-standard construction. Listed buildings do sometimes fall under that category, but there are still huge numbers of lenders that will lend on them.
Lenders will always say that the mortgage is subject to valuer’s comments – which means they will get a surveyor to look at the property and comment on whether it fits their criteria. Ultimately they want to know that the building will be easy to sell in the future and provides suitable security.
What can you do to a listed building without permission?
This will all come down to the listing on your building. The listing on my property, for example, only covers a part of the building. I live in a 300 year old pub that’s been converted into a house.
The front of it is highly protected with lots of rules around what I can and can’t do. But at the rear of the building, which was extended about twenty years ago, there’s less restriction. So you need to look carefully at the wording on your listing.
If you are ever in doubt with what you can and can’t do, speak to the local conservation team or planning office. Explain your plans and they will tell you whether you can go ahead or whether you need permission.
What do I need to consider when buying a listed property?
There will be a few restrictions in terms of the lenders available to you and whether they are comfortable with the building you’re looking to buy. It will need to meet their property criteria.
The other part to consider is that a listed building is always going to be of a certain age. It will be a minimum of thirty years old up to hundreds of years old. So you probably need to think about surveys. Many people would get a structural survey done on that property to know if there’s any issues.
You may need to get specialist surveys done as well. We have an asbestos roof, so we had an asbestos survey done on our property, for example. That survey helps make sure you’re comfortable with the property that you’re buying and the risk that you’re taking on.
What costs are involved when buying a listed property?
There’s no particular additional costs, unless you want to go for surveys. Depending on the type of survey you want, you might expect to pay £500-£600 up to a few thousand pounds.
As you go through the legal process, getting your contracts drawn up to buy the property, for example, there may be additional elements involved. It will again depend on the details of the listing, how the property is being maintained and so on.
One piece of advice is to make sure you’ve some funds behind you for the legal process to cover off any unexpected costs that come up. There probably will be one or two things that appear from somewhere.
Can I get a mortgage on a listed building if I’m a First Time Buyer?
Yes, absolutely, as long as you and the property meet the lender’s criteria. There’s no reason why you can’t get a mortgage on a listed building as a First Time Buyer.
Can I get a Buy to Let mortgage on a listed building?
Yes – again, as long as you meet the lender’s criteria and they are happy to lend on listed buildings, there’s no reason why you shouldn’t be able to get a Buy to Let mortgage on a listed building.
What if I have bad credit?
There are niche lenders that will look at people with bad credit or poor credit history. The specific details of your history will inform which lenders are available to you. But as long as that lender is prepared to lend on listed buildings then you can go ahead and buy a listed building. As usual, it all comes down to lender criteria.
What if I am self-employed?
I can guarantee that you can get a mortgage if you’re self-employed. I fall into that category myself. You can get a mortgage on a listed building if you’re self-employed. It’s the same as bad credit and being a first time buyer… as long as you fit the lender’s criteria and their affordability model, you can get a mortgage.
Is there anything to know when it comes to remortgaging a listed building?
Not particularly. If you’re looking to remortgage you will have lots of options – from staying with your existing lender to moving to an alternative lender. Moving to a new lender would involve another survey, but typically on a remortgage it’s just a valuation.
As you are moving lender and it’s a listed building, potentially that lender may ask for additional reports to make sure they’re comfortable the property fits their lending criteria. But there’s no reason why you can’t remortgage with another lender or stay with your existing one.
You could potentially borrow more, or go onto a new rate. You’ll have lots of options on the remortgage front, just as if you were buying the property.
How does the application process work when applying for a mortgage on a listed building?
It’s not massively different at all. When a client finds a listed building to buy, I would do a bit of additional work with the lender to make sure they were comfortable with the property, and that there’s nothing to be aware of from the outset.
We then apply for the mortgage and get the valuation underway – whether you decide to go for a full structural survey with the lender or get that done independently.
Once the valuation comes back, you could simply go straight through to mortgage offer, or we could need some additional reports at that stage. I would guide you through that process – whether that’s instructing additional surveys or just moving on to mortgage offer.
We’ll make sure you know what your options are and what the lender is thinking. Then we make a plan that’s right for you moving forwards.
How else can a mortgage broker help if somebody’s looking to buy a listed building?
With listed buildings there is always the chance of an unexpected cost coming in – surveys or legal work and things like that. So just be prepared for that and budget it in.
Where I can really help out is in researching the different lenders available to fit your specific situation. That way we can be sure to find the right mortgage for you. We get to know you, what you want from a mortgage and your future goals.
I’ve got over 90 different lenders to approach, so there’s bound to be the right lender out there. We’ll find you the most suitable mortgage for your circumstances and the house that you want to buy.
Your home may be repossessed if you do not keep up with your mortgage repayments.
The Financial Conduct Authority does not regulate most Buy to Let Mortgages.
Does It Cost For An Initial Chat?
Please don’t be afraid to pick up the telephone. Contact us with any questions or any conversations you want to have. There’s no commitment, there’s no silly questions. I’m here to try and help put your mind at ease, so let’s have a conversation and answer your questions.
Listed Building (Part 2)
Mike Haupt is back to answer more questions about listed buildings.What are the different grades of listed buildings in the UK?
There are three main grades in the UK – grade I, grade II and then, they call it grade III but it’s actually another version of grade II.
Grade I designates buildings of exceptional interest. Grade II* are buildings of special interest and grade II covers buildings of special interest that are worthy of preservation.
Grade I buildings are typically churches, cathedrals and really historical buildings. You tend to go down the grades to residential properties, which are older properties that have special interest in them but aren’t as heavily protected as Grade I historical buildings.
How does a building become listed in the UK?
The listed building process has an interesting history, which I won’t go into in too much detail. But it’s worth having a read about if you’re interested.
Historically agents would go and look at local buildings and decide whether they needed to be listed. The whole listed building process and planning act has changed over the years. Now, while we have existing buildings that are listed, if someone feels that a building should be included, they can actually apply for it through Historic England.
It would then be reviewed and accepted if it was appropriate to do so. There’s a fair few criteria, but that’s broadly the process.
Can you explain the planning process for making alterations to a listed building?
Buildings are obviously listed because of their historical value, so you can’t just go and change whatever you want. I live in a listed building with my wife, and we’re in the process of updating our windows.
You would have thought that would be relatively straightforward, but because it’s a listed building we’ve got to be really careful. We’ve had to work with the local planning office and the conservation officer to make sure we’re doing it in line with the listing.
You just need to work with the local planning office and talk to them before you start doing any work. But you can absolutely make alterations as long as it is in line with the local planning office.
I’m working with customers at the moment who are renovating a derelict barn. It has been lived in historically but not for a number of years. It is a listed building but they are able to gut it back and completely renovate it for modern living, within the planning rules for that building. There’s lots you can do – you just need to work with the local planning officers.
Are there any financial implications associated with owning a listed building?
From personal experience, when you own a listed building you are taking ownership of the history of that building – you’re its custodian of it for a period of time. There is upkeep to a listed building. And one window in our property has rotted away – but I can’t just go and get a UPVC window and stick it in.
The upkeep comes at an extra cost. But you also then get to maintain a historical building, its character and its true origins. So from a financial point of view there are costs involved in the upkeep of the building and it’s important to know what you’re getting into from the outset.
How does the mortgage application process differ for a listed building compared to a non-listed property?
Generally speaking there aren’t many differences. The initial process is about whether the lender will lend to you as a person or a couple – and that’s exactly the same as whether it’s a listed building or not. They’re looking at your income, your commitments, your credit history and how much you’re looking to borrow.
Where the listing makes a difference is when the surveyors go to the property. The surveyor may be really comfortable with the property itself and the lender will be more than happy to lend on it.
Or, they may look at it and find that it doesn’t quite fit their property criteria. It’s all about knowing the lenders to approach. A lot of the big lenders will accept listed buildings, but we need to decide which ones to talk to from the very beginning.
When you first start looking on Rightmove it’s about having a really good look at the property, talking to a few lenders and making sure they’re comfortable to accept that property from the outset.
Are mortgage lenders more cautious than when financing a listed building?
As long as it fits their property criteria then they will lend on it. There’s no real difference. Some lenders just don’t specialise in this area, and we know those lenders that will and won’t lend. We know the lenders we need to start talking to straight away.
Is it possible to get a mortgage for repairs or renovations on a listed building?
Yes, although it very much depends on what you want to do. The client I’m working with on the barn renovation has a very specialist type of mortgage on it. That’s because the property is not habitable at the moment.
But if you just want to borrow an extra £20,000 on the mortgage to redo the windows or do some work on the roof, that can be done with any mortgage company, within reason.
Are there any specific mortgage products or schemes available for listed buildings?
No, but in some ways that’s really good news – it means that you’re not being impacted by having a small percentage of the market where there aren’t many products to choose from.
You can go to the whole of the market. Everybody’s competing for business and therefore you can get the best rates available to you – that’s ultimately brilliant news for you as the customer.
Can you provide any tips or advice for individuals looking to purchase a listed building?
From personal experience, the first time you go to the property and fall in love with it, you’ll go around with glazed eyes that think everything is amazing. My big tip is to go back and have a really good detailed look at all the windows, the guttering, the roof and everything.
Ask the estate agent or the vendors if they had surveys when they bought the property. Is there anything in that survey that they’ve either done or not done? Start to do your research and decide if you want to get your own survey.
Listed buildings are older properties. We had a full structural survey done on ours because whilst we didn’t have any concerns around structural movement, we wanted to make sure the building was given a really good once over. That way we knew exactly what we were buying from the outset – there were no big surprises when we moved in.
How does the energy efficiency of a listed building impact mortgage options?
Generally speaking, it doesn’t have a huge impact, but that is a challenge with listed buildings. For example, we’ve got secondary double glazing. We’ve added lots of energy efficiency bits and pieces in our property, but our EPC rating is still pretty poor.
The big difference with a listed building is that you probably won’t get green building incentives. With some lenders, if you’ve got a property that is an A,B or C EPC rating, they will potentially give you a lower rate because your property is energy efficient and environmentally friendly.
It’s a struggle for listed buildings to get into those categories. It’s not impossible, but it is a little bit trickier. But generally speaking the EPC rating won’t have too big an impact on the availability of mortgages at the moment.
Are there any alternative financing options for purchasing a listed building?
It depends again on your individual circumstances and what you’re looking to do. For example, if you are looking to buy a listed building that isn’t habitable at the moment, and you are going to do some work to it quite quickly and move in, potentially a short-term bridging loan might work for you.
You can also buy in cash as well, obviously, if you have it. Otherwise, it would just be about looking at your individual circumstances, what your plans are for the building, what condition it’s in and what potential alternatives there are.
But if that building is habitable, so you can move into it straight away, mortgaging is always going to be your best option.
Can you share any success stories of clients who have obtained a mortgage for a listed building?
Well, myself and my wife are a good example. We bought our listed building and we also have many clients who have done the same. There’s the client I’m working with who’s bought the derelict barn, and I’ve got another couple who are literally just moving into a listed cob house. There, not only do we have the restrictions on cob housing, but it’s listed at the same time.
So yes, we have multiple stories and that work has given me really great knowledge in terms of the mortgage market and what is and isn’t available. I know those lenders we can go to straight away – not only for your own individual circumstances, but also for your property circumstances.
It gives me a really good understanding of what’s available, when it’s available and what the right options are for you.
Your home may be repossessed if you do not keep up with your mortgage repayments.
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- We believe in building lasting relationships with our clients. The kind where we get to know you, your family, how you live, what's important to you and what you want in the future.
- Then we get to work to help you achieve it, with regular reviews and updates, to keep your money working harder and smarter for you.
- We don't want to be the biggest, we want to be the best, for you and your family.
Because we play by the book we want to tell you that…
- Your home may be repossessed if you do not keep up repayments on your mortgage.
- There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
- The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.