Properties Subject to Special Circumstances

There are properties that may be subject to special circumstances.  In all cases, as with construction type, the following should be considered:

•    Future saleability of the property

•    Future re-mortgageabilty of the property

•    The insurability of the property

Specific points should be noted in relation to the following property types.  If there is any doubt about the security, clarification should be sought from the valuer.

1. Flats (up to 5 Storeys)

Flats are acceptable subject to a maximum loan to value of 90% (or 80% if new build). 

Flats in buildings above 5 storeys high are acceptable provided that they were constructed in or after the year 2000 (note: this would include conversions post 2000 where original build was prior to 2000) and are recommended by the valuer as suitable security with satisfactory on-going demand.  The maximum LTV is 75%.

2. Studio Flats

Studio Flats are acceptable subject to no adverse comments from the Valuer and confirmation from the valuation report that demand for the property is good.  Although there is no minimum square footage requirement, where this is below 35m2, the application will be subject to enhanced mandating.

Where the internal square footage is less than 35m2, specific guidance should be provided from the valuer as to the future saleability of the property.

3. New Build

The DBS definition of a ‘new build’ is a property that was first registered two years ago or less, following construction, conversion (excluding flats in buildings built prior to 2000) or material refurbishment.   To understand whether the level of refurbishment is ‘material’, valuer comments on property alterations should be considered.

For the purposes of new build warranties, any property built or converted in the last 10 years requires a new build warranty, e.g. NHBC guarantee or warranties from the professional parties involved in constructing the property e.g. architect’s warranties.  Details of warranty providers accepted by DBS are held in the UK Finance Handbook.

Maximum LTVs for New Builds:

•    For houses: 90% for purchase and re-mortgage

•    For flats / apartments: 80% irrespective of whether purchase or re-mortgage

•    Where there is an element of capital raising to the application (for re-mortgages), which includes debt consolidation, the maximum LTV will be capped at 75% (irrespective of whether the security is a house or a flat / apartment)

Note: the maximum LTV is based upon the purchase price minus any incentives (such as free white goods).

4. Business Use

The following uses are acceptable (all subject to regulatory requirements of at least 40% of that land being used, or is intended to be used, as or in connection with a dwelling):

•    Office / Study - Applications where one room is being used on an informal basis as an office / study are acceptable.  Any other arrangements must be referred to an underwriter

•    Child Minding - Acceptable on a small scale provided that the property is also declared to be the full-time home of the applicant(s)

•    Annex - Applications will be considered in the following situations:

o    Where the annex is used by a relative or au pair

o    Where the annex is vacant

o    If the annex is let commercially, this must be through a valid commercial letting agreement

o    If the annex is larger than the owner-occupied part of the building, the application will only be considered on Buy to Let terms 

5. Properties with Land

Properties which include larger acreage of land are acceptable provided there are no farming activities or planning restrictions.  It is a mortgage condition that the applicant(s) must undertake not to use the land for any agricultural or business purposes.  For re-mortgages care should be taken to check any existing tenancies and the Valuer should be asked to comment about the impact on the valuation of the property.

6. Undervalue Transactions

We will consider applications where the purchase price is below the market value, subject to the relationship between vendor and purchaser being plausible e.g. parent selling to child.

The equity must be gifted and not subject to any subsequent charge.

7. Retention and Final Inspection

Following an inspection by the valuer a recommendation may be made for works to be undertaken.  Prior to the receipt of specialist reports or confirmation that works have been completed, a retention may be recommended.

Where the retention is low in comparison to the advance and we have sufficient equity based on the current valuation we may waive a retention in accordance with the table below:

Where the LTV is above 80%, the retention will be made and an inspection is required prior to release, for which a charge will be made.

Where this specifically relates to self-build, please refer instead to section 22.6.

8. Final Inspection – New Build

The Society will not normally carry out final inspections on new builds but will rely on the conveyancer providing confirmation that the property has been fully completed following receipt of certificate to that effect from the warranty provider.  The exception to this rule is where the valuer has provided the original valuation from plans / site visit only or the valuer has made it clear a final inspection is definitely required for another reason.

9. Valuation of properties in multi-storey, multi-occupancy residential buildings with cladding

Requesting an EWS1 for buildings where there is no visible cladding or a low risk of remediation work creates long and unnecessary delays to the buying, selling or re-mortgaging of such properties. It also prevents the limited pool of competent experts from focussing their assessments on properties where there is a significant risk to the safety of occupants. A valuer should always have a rationale to justify the request for an EWS1 form. It does not apply to individual terraced, semi-detached or detached houses, bungalows or developments considered to be non-domestic.

Where a valuer or lender has been able to establish (within the limits of their competence) that the building owner has met the advice in the consolidated advice note, or that a building over 18 metres has a valid building control certificate in accordance with The Building (Amendment) Regulations 2018 (or the equivalent in the devolved nations as applicable), an EWS1 form should not be required. Where there is a route to remediation (for example through a warranty from the freeholder to cover the costs of remediation or from government grant funding), the valuer may take that into account in their valuation.

For buildings over six storeys, an EWS1 form should be required where:

•    There is cladding or curtain wall glazing on the building or

•    there are balconies which stack vertically above each other and either both the balustrades and decking are constructed with combustible materials (e.g. timber) or the decking is constructed with combustible materials and the balconies are directly linked by combustible material.

For buildings of five or six storeys, an EWS1 form should be required where:

•    There is a significant amount of cladding on the building (for the purpose of this guidance, approximately one quarter of the whole elevation estimated from what is visible standing at ground level is a significant amount) or

•    There are ACM, MCM or HPL panels on the building* or

•    There are balconies which stack vertically above each other and either both the balustrades and decking are constructed with combustible materials (e.g. timber), or the decking is constructed with combustible materials and the balconies are directly linked by combustible materials.

For buildings of four storeys or fewer, an EWS1 form should be required where:

•    There are ACM, MCM or HPL panels on the building*

* Note: metal cladding and ACM/MCM are visually very similar, so if metal panel cladding is present, the valuer should confirm with the building owner or managing agent in writing that they are not ACM/MCM, or, if confirmation cannot be obtained, an EWS1 inspection should be requested.