Don't Buy These Buildings (And Why They Look Cheap)

But I want to begin with non-standard construction properties.

Now, you may have heard of this.

You may not have heard of this.

So what is it? Well, standard construction means typically brick or block cavity walls with a tiled or slate roof.

That's what the vast majority of British housing is made of, and it's what lenders are very comfortable with.

Non-standard, on the other hand, means pretty much everything else.

It's concrete, steel frame, prefabricated panel systems, even timber.

In Cornwall and West Devon, concrete blocks were made using waste from mines.

It's a material now called mundic as it disintegrates.

And most of this stuff was post-war.

It was houses that were put up quickly and cheaply to replace bond stock or clear slums using methods that hadn't really been proven.

So what's the problem here? Well, Some of these materials haven't lasted.

In the concrete houses in particular, the steel reinforcement that was put into them, it turned out to corrode over time and the concrete starts to crack and break away and the structure weakens.

So there's a genuine question over the remaining lifespan and the structural integrity of a building like that.

And that's the whole issue.

Because a mortgage is secured against the property, the lender needs to be confident that if you stop paying... and they repossess the building, that they can still sell it in 10, 20, 30 years' time for enough to at least clear the debt.

Now, if the valuer can't be confident that the building will be sound and saleable, the lender won't take it as security.

It isn't about whether or not the house is nice, or whether you can afford it, or whether the deal looks good.

It's really just about whether or not that asset is good enough already.

from the purposes of lending.

And in many of these cases, you cannot see this sort of stuff from the outside.

These deals typically circulate in auction houses.

It may or may not be disclosed.

Sometimes it's more of a buyer beware kind of scenario.

Sometimes it is disclosed though.