The residential director for West Essex and East Hertfordshire based agent Mullucks Wells highlights “a relatively dramatic change” by some mortgage lenders.
William Wells of Mullucks Wells says it applies to non-standard properties and especially those with restrictive covenants and in particular some properties with land.
HSBC’s mortgage division shared with him an email containing this statement:
“These restrictions impede HSBC’s ability, in the event of possession, to obtain a fair market value for the property and therefore compromises the integrity of our security. Therefore, where it becomes apparent that there is a restrictive covenant in place we are unable to lend and the application will be declined and returned to the branch.”
Wells believes this appears to exhibit that HSBC doesn’t fully understand the notion of an uplift clause. If residential development takes place and there is an increase in value, a proportion of that goes to the existing owner.
“Effectively, the present owner is better off and the previous owner is better off and the bank is certainly no worse off. I accept that some purchasers may be nervous of buying a property with an uplift clause but evidence would suggest that this is a minority, because as an owner you are in control of the land and if you make no planning application, then nothing happens” he says.
He continues “I suppose the simple explanation is that if a lending source has enough business, it can make up whatever rules it likes. But this is a serious issue for many home owners of the larger properties, particularly those with land. It is something estate agents need to be a lot more careful about now and in the future”.