Steeped in history and rustic charm, all these buildings have one thing in common: they are deemed to be of special interest, and subject to protection. In other words, they’re listed buildings, and getting a mortgage on one can be a nightmare.
Fortunately, this is where we can help. Continue scrolling to find out what classifies as a listed building, how the different listing grades impact mortgages, restrictions to be aware of, and typical lender eligibility criteria you’ll need to meet.
What is a listed building?A building is listed when it is considered of national importance due to ‘special architectural or historic interest’, and therefore worth protecting.
As the name suggests, these buildings are added to an official register, the National Heritage List for England, which includes all nationally protected historic buildings and sites in the country.
Nearly all old buildings, if close to their original condition and built before 1840, are likely to be listed, and the aim of a listed status is to protect them from damage or inappropriate alterations that may detract from their ‘special interest’.
Is it possible to get a mortgage on a listed building?Before deciding whether they’re willing to lend to you, mortgage providers will assess a property’s resale potential. This is because, in the event of repossession, lenders will want to sell the property on as quickly as possible to recoup their losses.
Since listed buildings are less sought-after, this automatically moves them into a higher risk category. That’s not to mention the plethora of other risks commonly associated with such properties, including increased liability of depreciating in value over time if not well-maintained.
Although many mortgage providers shy away from listed buildings, there are a number of specialist lenders out there who are familiar with the market, making it possible for borrowers to secure competitive mortgages with flexible terms.
Listed building grades in EnglandListed buildings are graded to reflect their relative special architectural and historic interest. In England, they are categorised into either Grade I, Grade II* or Grade II:
- Grade I - buildings of exceptional special interest
- Grade II* - particularly important buildings of more than special interest
- Grade II - buildings of special interest, warranting every effort to preserve them
Listed building grading for Scotland and Northern IrelandScotland and Northern Ireland have slightly different grading systems, but the notion is similar
Listed building grades in Scotland
- Category A – buildings of national or international importance, either architectural or historic; or fine, little-altered examples of some particular period, style or building type;
- Category B – buildings of regional or more than local importance, or major examples of some particular period, style or building type, which may have been altered;
- Category C – buildings of local importance, lesser examples of any period, style or building type, as originally constructed or moderately altered, and simple, traditional buildings that group well with other listed houses
- Grade A - special buildings of national importance, including grand buildings and the fine, little altered examples of some important style or date
- Grade B+ - special buildings that might have merited A status but have minor detracting features such as impurities of design, or lower quality additions or alterations; buildings that stand out from grade B1 because of exceptional interiors or other features
- Grade B1 and B2 - special buildings of more local importance or good examples of some period of style; some degree of alteration or imperfection may be visible.
Listed building grades and mortgagesThe grade or category a listed building falls under will have further implications on mortgageability.
It is notoriously difficult to secure a mortgage on top level (Grade I) properties, which typically present the highest levels of risk and require utmost care and attention. Fortunately, only around 2.5% of listed properties in the UK fall into this bracket, and there are a handful of providers who will consider lending on them.
Grade II* / Category B / Grade B+ listed buildings are considered slightly more mortgageable than top level properties, and account for just under 6% of the total.
The majority of properties fall into the lowest tier, representing over 91% of listed buildings in the country. While you stand a better chance of securing a mortgage on this type of property, they still require expert attention, and a specialist lender is recommended.
How to get a mortgage on a listed buildingWhile the prospect of living in a majestic rural manor house or quirky cliffside lighthouse can be appealing, there are a number of considerations to be made before you commit to purchasing a listed building.
As with any non-standard construction property, it’s advisable to enlist the help of an independent broker with experience in the field. Carrying out the following steps can help you determine the viability of an investment.
Have a property valuationOften, mortgage providers’ lending decisions are strongly influenced by the outcome of a property valuation.
These are carried out solely for the benefit of the lender to highlight any features or defects that could affect the property's value, which will allow them to assess whether the property provides suitable security for the loan.
For this reason, it’s extra important to find a lender that is familiar with old or unusual property types - but even then there’s no guarantee you’ll be accepted, so it’s worth having a valuation carried out as early as possible in the buying process.
Check whether you can get insuranceGiven their age, characteristics and typical maintenance requirements, insuring a listed building can be very expensive; before you commit to buying, try and get the property approved by an insurer, or at the very least have a solid quote in place.
Standard insurance may not be sufficient for listed buildings, and in the same way a specialist mortgage provider is often required for such properties, you may need to approach a specialist insurer with the help of an independent broker.
Find an experienced surveyorIf you’re buying a listed building, having a full structural survey carried out is a must. While these can be fairly expensive, the information it provides can help sway your initial purchase decision, and prove invaluable when carrying out work or maintenance.
Due to the specialist nature of listed buildings, try and find a surveyor who is familiar with historic buildings and has been accredited by a professional body. Using the wrong type can be very damaging and costly, and could result in a rejection later on.
Before selecting a surveyor, it’s a good idea to double check that your lender is happy with your choice - some mortgage providers have a panel of approved surveyors, and listed building lenders especially may be particular about this.
Check what previous work has been done on the propertyIf any unauthorised building works have been carried out on the property by previous owners, you may become liable for the bill. Before committing to buy, check that the appropriate consent has been gained for any modifications that have been made
Restrictions when buying a listed buildingAs is often the case with unique property types, you may find certain restrictions associated with the listed property you want to buy. Not only could this scupper your future plans, it could also inhibit your choice of prospective lenders.
Restrictive covenants on property titles should be declared by the seller and will almost certainly come up in a property survey, so you’ll have plenty of advance warning before you commit to buying.
Some of the most common restrictions you may encounter include:
Maximum mortgage terms for listed buildingsWhile some mortgage providers may agree to lend on a listed building, they may cap the maximum term length, perhaps to 20 - 25 years, to mitigate the risk of the property degrading in condition over a longer period.
Bearing in mind that the standard term length is 25 - 30 years, a term cap could mean your mortgage ends up costing considerably more than you’d bargained for - which is why you should always read lender terms thoroughly before you sign on the dotted line
Consent for additional workto listed buildings If you’re buying a new property, the chances are you’ll have a few changes in mind to really make it your own. But be warned: you’ll usually need consent from your local planning authority before making alterations to a listed building, and it is an offence to carry out any work without the appropriate permissions.
As a general rule, you’re able to maintain your property using like-for-like materials and methods without prior consent. But if you want to replace the window fittings or hack down a dilapidated tree in the garden, tread carefully - these could well be part of the listing
Most listed buildings fall under Grade II, which have slightly less stringent restrictions. But if you’re hoping to make any significant changes, you may want to rethink your choice of property
Repairs and maintenance for listed buildingsDue to their age and special characteristics, listed buildings often require far more repair and maintenance work than your average home, which are often written into lender terms. These come at a cost, which can be significant.
As well as having to replace and upkeep your property, you’ll be required to preserve the original features of the listed building; off-the-shelf replacements from B&Q are unlikely to cut it, and depending on the work, you may need to enlist the help of a specialist tradesperson at an additional expense.
The extra maintenance costs will not only have to be included in your budget, lenders will often factor them into their affordability assessments - meaning you could receive a rejection if your finances aren’t deemed sufficient to cover the necessary expenses in full.
How much deposit is needed for a listed building mortgage?Nearly every mortgage provider will have minimum deposit requirements. Because listed buildings present an element of risk, and the number of lenders who are willing to consider them are limited, those that do are able to justify having more stringent lending criteria
In the majority of cases, lenders cap the maximum loan-to-value (LTV) at around 75 - 80% (20 - 25% deposit) for listed building mortgages, although it may be possible to secure one for as little as 90% LTV (10% deposit), circumstances permitting, with the help of a specialist.
Generally speaking, a larger deposit will give you access to a wider range of mortgage providers and more competitive rates. If you present additional risk in other areas, a higher down payment can instil greater trust in lenders and make them more likely to consider your application
How much can I borrow for a listed building mortgage?Mortgage providers usually use income multiples as a starting point to base lending, with the standard allowance being between 3.5 and 4.5 times your annual income. For a borrower taking home £40,000 per annum, this equates to a prospective mortgage of between £140,000 and £180,000.
Depending on the lender and your circumstances, some may be more or less generous; if you have bad credit or questionable job security, for example, your borrowing may be capped, but if your application is particularly strong, some lenders may allow you to borrow up to 5.5 or even 6 times your annual earnings.
But borrowing isn’t based on income multiples alone; what it really comes down to is your affordability, and this is even more paramount where listed buildings are concerned
Affordability is calculated by assessing your monthly income in relation to your monthly outgoings, to see whether your disposable income is sufficient to cover the repayments.
Remember, listed buildings require costly levels of ongoing repairs and maintenance, and mortgage providers will factor these expenses into your outgoings during affordability assessments.
Can I buy a listed building if I have bad credit?While having a low credit score or a history of adverse can be detrimental to a mortgage application, lenders, particularly those specialising in bad credit mortgages, are willing to consider the bigger picture.
The severity of the instance and how long ago it occurred can have a big impact on your eligibility and how competitive the interest rates you’re offered are. For example, a few missed payments a few years ago may be overlooked, whereas a recent case of bankruptcy could negatively affect your chances.
Applying for a lower LTV loan can boost your borrowing options if you have poor credit, since it reduces the financial risk for lenders. If you’re concerned your credit history could inhibit your borrowing on a listed building, it’s advisable to ask a broker which lender is best to approach given your niche circumstances
Speak to an expert before buying a listed buildingBuying a listed building is no mean feat, so don’t be put off if you’ve received a mortgage rejection in the past.
Many highstreet banks and other mainstream providers shy away from unconventional building types, but the good news is that there are specialists out there - and we know exactly where to find them
Our team of expert advisors are at hand to guide you throughout each stage of the mortgage process, from finding a suitable lender, flagging any potential risks and restrictions, getting your supporting documents in order, all the way through to completion.
No matter your circumstances, we’re confident that we can save you valuable time, money, and wasted rejections on your listed building mortgage. Give us a call on 02380 980304 or submit an online enquiry via our website.