Listed buildings are special interest properties and by special interest it could be due to their historic value, architectural form or social significance and they are registered and protected by the respective governing bodies of England, Wales, Scotland and Northern Ireland.
Obtaining a mortgage on a listed building can be more complicated than obtaining a mortgage for a standard property and usually depends on the properties listed status, valuers’ comments, the current condition of the property and the amount of deposit you have available.
If you are considering buying a listed building or you want to remortgage a listed building you already own, please read this page and obtain all the information you need for mortgage purposes and importantly ask the questions you need to decide whether it is right for you.
The reason that obtaining a mortgage can be sometimes more difficult is due to the risk involved for the mortgage company. For example, a grade I listed building in England, will require much more maintenance than a standard residential property and in addition if the lender ever needed to sell the property, the more unusual it is, the harder this could be.
The grading systems for listed buildings are as follows.
In England and Wales:
Grade I: buildings of exceptional interest.
Grade II*: particularly important buildings of more than special interest.
Grade II: buildings that are of special interest.
In Scotland:
Category A: buildings of national or international importance, either architectural or historic, or fine little-altered examples of some particular period, style or building type.
Category B: buildings of regional or more than local importance, or major examples of some particular period, style or building type which may have been altered.
Category C: buildings of local importance, lesser examples of any period, style, or building type, as originally constructed or moderately altered; and simple traditional buildings which group well with others in categories A and B.
In Northern Ireland:
Grade A: buildings of greatest importance to Northern Ireland including both outstanding architectural set-pieces and the least altered examples of each representative style, period and type.
Grade B+: high quality buildings that because of exceptional features, interiors or environmental qualities are clearly above the general standard set by grade B1 buildings. Also, buildings which might have merited Grade A status but for detracting features such as an incomplete design, lower quality additions or alterations.
Grade B1: good examples of a particular period or style. A degree of alteration or imperfection of design may be acceptable. Generally, B1 is chosen for buildings that qualify for listing by virtue of a relatively wide selection of attributes. Usually these will include interior features or where one or more features are of exceptional quality and/or interest.
Grade B2: special buildings which meet the test of the legislation. A degree of alteration or imperfection of design may be acceptable. B2 is chosen for buildings that qualify for listing by virtue of only a few attributes. An example would be a building sited within a conservation area where the quality of its architectural appearance or interior raises it appreciably above the general standard of buildings within the conservation area.
How will this effect a mortgage?
Some mortgage companies will not lend on listed buildings at all, whilst for others it will depend more holistically on the situation. In general, the more special a building is i.e. the more important it’s listed grading, the fewer lenders that will consider it and in general the more deposit you will need in order to be able to purchase it.
For example, some lenders may consider a mortgage with only a 10% or even 5% deposit on a grade II listed building but for a grade I listed building a deposit of 25% or even 40% may be required.
It is very important to discuss the proposed listed building in depth with your mortgage broker and if you have any questions please get in touch.
Other Mortgage Considerations
Mortgage Term
As listed buildings generally need greater maintenance some mortgage companies may restrict the lending term depending on the property. This could be to reduce their risk on the loan to the property degrading over time. The greater the importance of the property the more likely this may be seen.
Listed Building Restrictions
Any restrictions that are placed on a property will be considered by the mortgage company. The more restrictions that are in place, the fewer mortgage companies will consider it. Always ask about any restrictions that are in place and discuss this with us.
Insurance
It is a part of any mortgage contract that a property needs to be insured and listed buildings can be often more difficult and expensive to insure, compared to standard residential properties. Understanding the insurance requirements can be very important and ensuring you have adequate protection in place is paramount. It is good practice to understand the insurance requirements and costs involved before proceeding with a purchase and we are here to help you with that situation.
Future Maintenance
If you are considering a listed building, you must be comfortable with the future maintenance costs. A mortgage lender is also going to take this into consideration when they look at things like your affordability for the property. It is essential you discuss this with your mortgage broker.
Checking with the Local Authority
This is important for several reasons; firstly, if work has previously been completed to the property, was it authorised and was it done to the correct standards? Planning departments do have the power to ensure restorative work is completed and this could be expensive. Secondly, if you are planning to modify or complete building work to the property, it is sensible to check that what you want to do is permitted.
The information above is not exhaustive for listed buildings but gives you an indication of the extra considerations that will need to be thought about. Please get in touch to discuss your specific requirements with us today.