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How to identify a LPS-type construction?  

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I was undergoing the process of purchasing an ex-council flat in London as a first-time buyer, when the valuation came back to say they wouldn't be lending on the property. The valuation report covered the issue as follows: "CONSTRUCTION - Walls: LPS: Not Known", then goes on to add: "I have not provided a valuation because the property is not acceptable to the lender due to not meeting lender requirements for LPS construction".

So it seems be a "computer says no" type of situation, since there's no indication they actually know the kind of LPS they're dealing with, but would rather dismiss it outright without doing the legwork. There are no other objections from the valuer. A mortgage was granted on it back in 2014, and before that in 2007, though I understand tower blocks (even though this one is only eight stories) have come under greater scrutiny in the past couple of years.

I know not all types of LPS are considered an immovable barrier for most mortgage lenders. Does anyone have any suggestions as to how I might find out the exact kind of construction it might actually be? I was going to contact the Building Control section of the local council - is that a good place to start? Thanks very much for any responses to this query!

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Hello JonRob, sorry to hear you're experiencing problems with you purchase.

I will state straight away that I am not an authority on Large Panel System constructions but I will do my best to share with you, some of what I do know.

In your case and without knowing who your mortgage provider is, it may simply be case that they do not lend on LPS properties irrespective of the construction name. To find out if this is the case, either contact them directly or type the name of your provider followed by the words –‘ Lending Criteria Intermediaries’ into Google and you should be able to view the companies complete lending criteria guidelines which should indicate if any form of LPS construction is suitable security or not. You will normally find these details listed under the sub heading heading ‘Property type’.

Many lenders are indeed cautious when taking on this type of property, especially in relation to older medium and high-rise constructions and former Council owned properties. The partial collapse of Ronan Point, a high-rise block of flats in 1968 had already caused many lenders to shun Large Panel blocks due to a severe drop in public confidence public confidence and re-sale values.

Even today, there are still concerns being raised against certain types of LPS which is why the surveyor is always asked to identify a named system where possible.

Overall many lenders still view medium and high rise LPS systems as poor security for lending purposes, particularly in relation to properties outside London as this type of property is often the first to lose significant value in the event of a market downturn.

Certain mortgage providers however do view London based properties as slightly more favourable due to the sheer demand for housing. If I recall correctly, Santander used to provide mortgages for properties over 7 Storeys high in London subject to valuation, whilst limiting lending to 7 stories or less elsewhere in the country, so clearly some exceptions exist for your area.

The key to securing your mortgage appears to lie in:
(A) Identifying the exact construction type if possible
(B) Sourcing the right lender by checking through the providers lending criteria prior to submission.

LPS panel properties can be difficult to identify. Some councils still hold records of their complete house stock which may actually identify the system, but if the stock has been sold or transferred to a housing association then this information will no longer be accessible.

If you can provide the address of the block, I can check my records to see if I have your block in my Council database listings. You can post the general location below or if you prefer, you can send the full address including postcode to admin@bisfhouse and I will check for you.

In relation to lenders, The Halifax, Kent Reliance, NatWest, Santander and the TSB used to regularly lend on medium and high-rise flats but at the time of writing I am unsure if this includes LPS systems.

You would need to contact each directly to query this before submitting an application or you could search through each providers’ lending criteria online first.

For Example, this is what Halifax now lists as unacceptable property types:

Timber or metal framed buildings where the cavity, between frame & cladding, has been retrospectively filled with an insulation material

Concrete walls as built in Cornwall or Devon before 1950 (1960 for postcodes PL12, 13, 14, 15, 17, 18, 22 & 23) where valuer has recommended a Mundic report and test of the concrete has classified the concrete in either class B or C

Unrepaired, designated defective properties under the Housing Act 1985, Housing (Scotland) Act 1987, Housing (Northern Ireland) Order 1986 are not acceptable.

Flats or maisonettes of large panel system type unless acceptable structural appraisal on the whole block.

Load bearing panels of asbestos or gypsum plaster construction

Properties which are structurally unsound & Properties which are uninsurable.

LINK TO ORIGINAL INTERMEDIARIES PAGE

I hope this helps

Marc

 

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