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Mortgages for ex-council houses

Ex-local authority mortgage comparisons are provided by Koodoo.[1]

  • Compare mortgages for ex-council houses and flats, including high-rise and unusual construction
  • Consider seeking expert advice before taking out a mortgage
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Couple day dreaming about their future home

Should I buy an ex-council home?

Buying an ex-local authority home can be a great way to get on the property ladder and access central postcodes that might normally be out of your financial reach.

They’re usually much cheaper than other similar-sized properties, and often very spacious as they were designed for family living - plus, council homes were generally built to last.

Yet there are other implications you should consider, including the state of the property, the surrounding area and what’s possible when it comes to financing your house purchase.

Couple day dreaming about their future home

Can you take out a mortgage on an ex-local authority property?

It’s possible to get a mortgage for an ex-council home - although it can be trickier than taking one out for a standard home.

Some lenders are reluctant to lend on certain types of council property or ones containing particular materials, like high-rise buildings and properties with cladding.

What’s more, ex-local authority properties in general can be more challenging to sell than private homes.

Risks like these can make lenders more cautious, which means you may have fewer mortgage options to choose from.

How to get a mortgage on an ex-council property

If you’re considering buying an ex-local authority property, there are a few steps you should take:

  1. Check the freeholder

    Find out whether the local council is still the freeholder. If so, you should look into the annual service and maintenance charges to gauge what you’ll need to pay

  2. Find out about any planned major works

    These are essential renovations that need to be made to the property which will cost any individual leaseholder more than £250

  3. Contact a specialist mortgage broker

    Speak to a specialist adviser with experience in dealing with ex-council homes. They’ll match you with lenders that offer ex-council home mortgages and help you find the best rates

  4. Choose your lender and apply

    Compare mortgage deals and select the lender and rates you’re most happy with, then work with your mortgage broker to submit your application. You’ll need to let them know about your income and outgoings, any deposit you have and your credit score

  5. Get a survey

    The lender will do their own valuation report to check the property is worth the amount you want to borrow. But you should also have your own independent survey done to check the condition of your property and highlight any hidden repairs that might be needed

Types of ex-local authority property you could buy

Typically, most council homes available to buy will be flats and maisonettes, followed by houses and bungalows.

Many council homes were built in the 1950s and ‘60s and were made of concrete or prefabricated.

Some of these homes were made with certain types of concrete which mortgage providers aren’t prepared to lend on - so it’s worth doing some research about the construction of the property you’re interested in buying.

How do lenders decide on an ex-local authority mortgage?

When lenders and surveyors are considering your property and mortgage application, there are several things they’ll be looking at, which includes:

The property location

The safety of the local area and the appeal to prospective buyers is considered

Other owners in the area

Lenders sometimes prefer a certain percentage of the units in a local authority block to have private owners.

How it’s constructed

Some concrete council homes built in the past encountered structural problems so lenders will want to investigate this

The resale value

Lenders will want reassurance your property is valuable enough to secure your loan against

Are there different mortgage rules for ex- council flats?

If the council property you want to buy is a flat there are some extra factors that mortgage lenders will consider:

  • If it’s in a high rise - Most lenders won’t be prepared to lend on any ex-council property located in a building that’s above five storeys because of the potential for extra maintenance costs
  • If it has an external walkway or balcony - If you need to access your front door via a communal walkway this poses a security risk that many providers won’t lend on
  • If there’s no separate kitchen - Some lenders aren’t keen on very small or studio flats and the risks that come with them, including the potential difficulty of resale
  • If there’s cladding - Mortgage lenders can refuse to lend on properties within a building that has cladding materials, unless it comes with an EWS1 form to show it’s been inspected and approved by a professional surveyor

Am I eligible for an ex-council house mortgage?

Your ability to get a mortgage will depend on a number of things including the amount you need to borrow, along with:

  1. How much deposit you have

    This is the amount you can put down as a lump sum

  2. Your employment status and income

    Lenders typically want to see stable employment and will offer a multiple of your income for the amount you can borrow

  3. Your outgoings

    Your lender will look at how your spending, including bills and everyday living expenses, affects your overall disposable income

  4. Your credit score and history

    Any existing debt you have like credit cards and overdrafts will be taken into account

  5. Your age

    Most lenders have a minimum age of 18 and a maximum age of 75

Loan-to-value on ex-council houses

Some lenders will put a lower maximum loan-to-value (LTV) on ex-council houses because they’re seen as non-standard and more of a risk.

A lower LTV is a way of protecting the lender from the property potentially dropping in value.

As a buyer, this means you may have to pay a higher deposit than you might expect for an ex-council home mortgage.

For example, the lender might have a maximum LTV of 90% on standard houses, but only 85% on ex-local authority houses.

This means if you were buying a home worth £100,000, you’d need a £10,000 deposit for a standard home, but a £15,000 deposit for an ex-council property.

Frequently asked questions

Often lenders label ex-council flats as non-standard due to the uncertainty around them. This type of property can raise questions about its construction values and the risk of not retaining its value in the future.

Alongside that, there may be added risks around the security of the local area and if there’s a high concentration of rented council homes (rather than owner-occupied flats) in the same block or building.

To counter these risks, lenders often put extra measures and criteria in place like lower LTV rates and requiring at least a 50% private owner occupancy of homes in the surrounding ex-local authority housing.

Yes, you can but it’s often more difficult than taking out a mortgage on a standard home.

To prevent your mortgage application being rejected, it’s best to go through a specialist mortgage broker with expertise in ex-local authority homes.

It’s possible, but it’s much harder than if you had a perfect credit history. The key is to find the right lender who specialises in these types of circumstances.

As someone with bad credit, you’ll probably have to pay a higher interest rate and fees, so it’s a good idea to speak to a mortgage adviser to help you get the best deal.

Although the best approach is to try and rebuild your credit score first and save for a bigger deposit before you apply for a mortgage.

Yes, it’s possible to get a mortgage if you’re a first-time buyer and ex-council homes are often a much more affordable way to get your foot on the property ladder.

There are several government schemes to help first-time buyers, including if you want to buy the council home you currently live in.

An ex-local authority property can be a great investment and it’s possible to get a landlord mortgage for one - although you’ll usually need to jump through a few more hoops.

For example, you’ll typically need a deposit of at least 25% and demonstrate that you’ll be able to achieve a rental income that will cover up to 145% of the mortgage payments each month.

You may also need to provide the lender with more information about the property than you would with a standard flat.

Again, it’s best to go through a specialist broker who’ll be able to advise on the mortgage providers that will lend on ex-local authority properties.

This is a government scheme that lets you buy the home you’re living in as a council tenant for much less than the full market value.

To qualify for the discount you’ll need to have been a council or housing association tenant for at least three years.

After this, you’ll be eligible for a 35% discount on a house or a 50% discount on a flat. This increases each year by an extra 1% for a house or or 2% for a flat, up to a maximum discount of 70%.

One of the main advantages of the scheme is that you don’t have to save for a deposit because you can use your Right to Buy discount instead.

Different rules and schemes apply for council tenants in Scotland, Wales and Northern Ireland.

There are two main ways to find out whether your property is ex-council. If your property’s for sale you can ask the estate agent who will have details on the history of the property.

The other option is to buy a copy of the deeds from the Land Registry for a small fee of £3 - this will tell you current and past information about the property, including its previous owners.

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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

PLEASE NOTE: THE FCA DOES NOT REGULATE MOST BUY TO LET MORTGAGES

[1]For online mortgage comparison and advice Gocompare.com introduces customers to Koodoo which is the trading name of Mortgage Power Limited who are authorised and regulated by the Financial Conduct Authority (FRN 845978). Gocompare.com’s relationship with Koodoo is limited to that of a business partnership, no common ownership or control exists between us. Please note, we cannot be held responsible for the content of external websites and by using the links stated to access these separate websites you will be subject to the terms of use applying to those sites.