Help - mortgage application declined because of low proportion of owner occupied properties in the area

[BluePoet]

My daughter has had an offer accepted on a 3 bed ex local authority flat in London. Small block of 6 flats – not on an estate. Close to a Gail’s!!
Mortgage agreed in principle 78% LTV. The Building Society valuation has said that the proportion of owner-occupied properties in the area is low. The B Soc will not offer a mortgage on it as a result. 3 of the 6 properties sold fairly recently - and are owner occupied according to the estate agent. Zoopla values the flats at more than my daughter is paying. Research shows proportion of owner occupied homes is 40% versus a London average of 43%
We are bemused as to why this would be viewed as high risk.
We are worried that other lenders may take a similar view.
Any ideas as to how we can secure a loan? Or should she walk away

Just ring the bs and say they are owner occupied. Usually decisions are made by a computer and just need a person to check it properly. Otherwise apply to a different lender. Might be worth speaking with a broker as they usually have better knowledge over which lenders accept which conditions

Close to a Gail’s!!

I am intrigued, what is Gail's?

A cafe which is considered to be an indicator of gentrification

Ask your broker to go to the building society for an idea at what value they would lend at - and revise your offer to the seller accordingly. Although the BS used the occupancy rate as a reason you need to read between the lines - they are telling you its too expensive for them to lend on for the area ! They are telling you that you would be overpaying and they dont want to lend on that basis. If your daughters deposit was bigger it wouldn't have come up as the risk they percieve would be less - but I dont suggest increasing the deposit - you need to reduce your offer.

The building society will have a list of postcodes they won't lend in for whatever reason, it sounds like this is one. Best thing would be to speak to a broker, just because one lender won't cover that area it doesn't mean none will. Try London & Country (often recommended on here, & I used to work for a building society and they had a good reputation).

One thing to be careful of in a mixed council and private block is the council usually get to say what work does or doesn't need doing and will want to use their own contractors. Can mean the work is more expensive than in the private market and that she will have no choice as to whether it actually needs doing.

But if she is happy with that, she can discuss what would she have to do to make lending possible, or look for another mortgage provider.

Use a whole market free to use broker like London and Country, or Charles Cameron.

They are obliged to back up their recommendation by giving you the closest alternatives and will be aware of lender quirks. So could well find you something cheaper.

An additional advantage is that they have progress chasers who keep the whole thing on the move and who have more clout than individuals.

Banks and building societies analyse risk on properties to check the safety of their own money. If they are too nervous to lend I’d always walk away. No way am I risking my money when the experts don’t think it’s a good bet.

She needs to go to a mortgage broker who can navigate around this sort of thing.

Just a word of caution for anyone considering buying an ex-council property: major works costs can be extremely expensive. In my case, the bill was around £30,000. Recently, I saw someone on Facebook whose major works bill was approximately £55,000. It’s definitely something buyers should research carefully before purchasing.

Update
applied for a mortgage with Halifax. All approved with no issues! Survey on Friday!

Brilliant 👏