Many people are looking to release money tied up within their homes, and with up to one in ten properties being ex-council-owned, you might wonder if it's possible.
You can get equity release on an ex-council property. Most equity release plans allow for ex-council houses; however, fewer lenders offer equity release on ex-council flats. The value of your home and the level of local authority-owned properties in your area will impact your eligibility.
Equity release lenders have differing views on what is acceptable (for example, houses and flats have differing minimum values), so there are some essential things you need to know before applying.
In this guide, you will learn:
In this guide, I will focus on the most common type of equity release, lifetime mortgages.
Remember, all applicants must be aged 55 and over to qualify for equity release.
You can get equity release on an ex-council house; many lending options exist.
However, there are several factors the lender will consider, including your:
- Property value and
- Location
Your property value
Typically, the minimum property value for equity release is £70,000.
However, some lenders increase their minimum property values if the property is an ex-council house. For some, this is £100,000; for others, it is £150,000.
As part of an equity release application, you get a free valuation completed by a surveyor. This will primarily be based on the sale history in your area of similar properties over the last six months.
If you are unsure of your property value, we suggest speaking with an advisor who can look at the sale history in your local area. Their advice will be based on this estimate but can change if your valuation is higher or lower than expected.
Location
All lenders consider the location of your home. They want to ensure that the property's saleability is not negatively affected by the area in which you live.
Different lenders assess your location differently. For example, some lenders will not lend on property within certain postcodes, whereas others consider the percentage of properties still council-owned in the area.
In this case, anything over 40% in the area can restrict access to some products. You can check your area on www.streetcheck.co.uk.
You can get equity release on an ex-council flat; however, you may be restricted to specific lenders, as the criteria for ex-local authority flats is much stricter than houses.
Lenders have much higher minimum property values for ex-council flats. The minimum on the market is £100,000; however, some lenders require your ex-council flat to be worth at least £200,000.
Your flat's location will also be considered, including your postcode and the percentage of properties still owned by the local authority.
Leasehold properties
While not specific to ex-local-authority-owned properties, if your property is leasehold, to qualify for equity release, the lender will consider:
- Your lease length
- Ground rent
- Service Charges
If the council still owns the freehold and your lease is too short, you may need to contact them to either extend the lease or purchase the freehold.
I have written a complete guide to equity release on leasehold properties.
The easiest way to check if your property is ex-council-owned is by requesting a copy of the title deeds.
There are a few parts of your title deeds which could suggest the property is ex-council-owned. The most common is a reference to a discount period from when the property was originally purchased from the local authority.
Title deeds can be confusing to read, as most is legal jargon. However, if there is any part relating to your local authority, it could suggest it is ex-council-owned.
We request a copy of your title deeds as part of our free equity release advice. So, if you book an appointment, we will handle all this for you.
Alternatively, to complete this yourself, you can visit https://www.gov.uk/government/organisations/land-registry.
You must create an account and pay £3 to access the documents.
If you need help, contact us on 0207 158 0881 or email info@moneyrelease.co.uk to provide your copy for a qualified advisor to read.
There are two main reasons why you could be refused equity release on an ex-council home:
- If your property value is lower than lenders accept and
- Your property location.
Property value
If your ex-local authority house is valued at less than £150,000, there will be restricted lenders available, and no lender will offer equity release for ex-council houses under £70,000.
If your ex-local authority flat is valued at less than £200,000, there will be restricted lenders available, and no lender will offer equity release for ex-council flats under £100,000.
Property location
You could also be refused based on the location of your property. For example, if you live next to an anti-social commercial property, such as a pub or nightclub. This is because the saleability of your property is essential to the lender - primarily so that when the plan ends (when the last borrower passes away or moves into long-term care), the property can be sold quickly to repay them.
There are also other reasons you could be refused equity release, which are not limited to ex-council properties.
You can read our complete guide on why you could be refused equity release here.
However, I would like to assure you of a couple of things...
Your equity release application is not affordability assessed. This means the lender will not consider your income or liabilities to calculate the amount you can release.
So, if you have a low income, don't worry; an equity release should be available.
Similarly, if you have poor credit, this should be fine - as the lender doesn't require monthly payments.
When people who own ex-council properties come to us, we can almost always help them release money from their homes with a suitable plan.
You cannot use equity release to purchase a right to buy council property.
When purchasing the property at a discounted rate, the local authority places a charge on the property, which typically lasts five years and is called the pre-emption period.
No equity release lenders will offer equity release while you are within the pre-emption period.
However, there may be specialist mortgage options available to you.
According to gov.uk, you have the right to buy your council property if:
- It's your only or main home
- It's self-contained
- You're a secure tenant
- You've had a public sector landlord (for example, a council, housing association or NHS trust) for 3 years - it does not have to be 3 years in a row
They also state that if your property was sold to another landlord (like a housing association) while you lived in it, you might have the Right to Buy.
This is called 'Preserved Right to Buy. To find out if this applies to you, ask your landlord.
Here at Money Release, we specialise in equity release. If you would like further information on purchasing a right-to-buy property, you can contact Lloyd Wells Mortgages, whom we work closely with.
If you have further questions, why not speak with one of our qualified advisors?
Call us on 0207 158 0881 or use our online form to book your FREE consultation.
While a qualified equity release advisor has written this guide, it is not intended to be used as financial nor legal advice and should not be relied upon.
To understand the full features and risks of an Equity Release plan, ask for a personalised illustration.
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