The Intermediary – October 2025 - Flipbook - Page 86
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HARPENDEN BS
C AS E ON E
New-build flat with high
service charges
We do not have a maximum service charge or
ground rent amount. Instead, we are led by our
valuers on whether the property is deemed to be
suitable security. This also applies for re-saleability
and EWS1 concerns. Please note, our maximum
loan-to-value (LTV) is 85%.
BUCKINGHAMSHIRE BS
first-time buyer hopes to purchase a
new-build flat for £300,000 with a 10%
deposit. The annual service charge on the
flat is £3,600, and there is also a ground rent of
£350 per year.
Although the buyer earns £45,000 and passes
initial affordability checks, some lenders reduced
maximum borrowing due to the high ongoing
charges. Others raised concerns about resale value
and potential cladding risks, even though the
building is EWS1-compliant.
A
UNITED TRUST BANK
United Trust Bank (UTB) requires the ground rent
to not exceed 0.1% of the market value; however,
we will consider up to 0.2% on referral prior to
submission. This particular example would require
a referral.
If approved, the monthly value of the combined
ground rent and service charge at application
will need to be factored back into the monthly
affordability assessment.
If, in the view of the surveyor, an EWS1 form
is required, the cladding must be of A1, A2 or
B1 standard for us to consider lending. Further
questions may arise if the resale value is more than
10% different to the market value.
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The Intermediary | October 2025
The society would not seek to reduce the loan
amount if the affordability assessment supports
the requested level of borrowing. However,
the annual service charge may be considered
excessive, and this could impact the society’s
willingness to lend. In such cases, we would refer
the matter to the valuation company for their
opinion prior to issuing a decision in principle
(DIP). The valuer would confirm whether the
property is deemed suitable for lending. If the
valuer indicates that an EWS1 form is required,
this must be provided. Additionally, the society
is unable to lend on properties located in blocks
of flats with more than six storeys, regardless of
which floor the proposed security is situated on.
TOGETHER
Together could support this applicant with a
maximum 75% LTV mortgage, assuming it is of
standard build and not over six floors. If this was
the case, it would be considered ‘non-standard’
and capped at 65% LTV. If the building has a
valid EWS1 we could look to lend on it but would
require comments from a valuer to evidence this
and would use these comments as our basis for
the LTV. We would work the service charge and
ground rent into affordability, and if this passes the
affordability check we could proceed.
