Mortgages  

Mortgage restrictions should loosen: adviser

Mortgage restrictions should loosen: adviser

A Devon-based adviser has called for area-specific section 106 restrictions to be loosened as a way of helping the mortgage market.

Leanne Borthwick, a mortgage adviser for Dartmoor Financial, said area-specific restrictions could be putting off lenders with regard to new-build properties.

She said: “Given that Devon and Cornwall are fairly big counties I tend to face the problem of specific areas within the section 106 agreement such as North Cornwall, Dartmoor and surrounding areas and North Devon.

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“For a lender this is quite a concern as of, course, in the event they need to sell the property, their target market is fairly small.”

Ms Borthwick claimed restrictions should be less specific, and called for a mortgage clause to state that the section 106 agreement would not apply in the event of a repossession.

Recently, Trevor Branton, financial planning consultant for Clearwater Financial Planning, also based in Devon, warned that the residential market for affordable housing was being stifled because lenders did not want to lend on properties with a restrictive covenant.

Section 106
Under section 106 of the Town and Country Planning Act 1990, any person interested in land of a local planning authority may enter into an obligation that could include restricting the development or use of the land in any specified way, or requiring it to be used in a specified way.

Meanwhile, there were hints lenders could be responding to demand for new-build properties.

Skipton Building Society recently launched a range of products targeted at new-build, including free valuation instructed at application, longer-term fixed end dates and underwriters dedicated to new-build.

Paul Darwin, the society’s head of intermediary relationships, said: “We see the new-build market as essential in meeting the growing UK housing need.

“It plays a key role in supporting both first-time buyers and hardworking families looking to move up the ladder.”

Background

Others have cited broker optimism for the sector.

Graham Felstead, head of NatWest intermediary solutions, recently said: “The buy-to-let and new-build sectors have both been touted as growth areas for 2015.

“We have an appetite to grow our presence in both of these areas of the mortgage market, and have recently refreshed our new-build proposition to offer a more attractive approach to builders’ incentives.”