A bank lending perspective
After the flurry of purchasing in 2020 and 2021 where many people purchased properties without much due diligence, over the past 6 months we're starting to see more buyers conducting thorough checks before making their offers.
So I thought we'd delve into a topic that has been cropping up quite a bit lately: non-consented work on properties and how to approach it from a bank lending perspective.
We've seen instances where properties have unconsented work, title issues, or concerns raised by building reports, and it's one of the biggest challenges for real estate agents in getting property sales across the line.
But it doesn't have to be difficult - the key thing is presenting these situations well and in a low risk manner for the lender.
Mitigating risk factors with building issues
When it comes to assessing things like building report issues or how the property is affected by watertightness, we need to look at the level of risk for the bank throughout the entire application process.
Banks consider a multitude of factors here;
Loan-to-Value Ratio (LVR): They assess your equity in the property or the deposit you're bringing to the table.
Location: The property's location matters. A central city property often holds more appeal than one in a remote area, especially if there are issues with the property.
Fixability: How easily can the issues be resolved? For example, if a building report identifies cladding problems, and you have a quote from a reputable builder confirming the cost of repairs, it becomes a manageable issue for the bank.
Insurance: Is the property able to be insured with no exclusions? if so, the bank is likely to be more willing to lend money to purchase it.
Title issues
Title issues, such as those in cross-lease titles, can also pose challenges.
Commonly, something like a conservatory, garage or a carport hasn't been added to the flats plan. In such cases, the bank assesses the potential risk of property disputes with cross-lease neighbours and how that might impact a future sale.
We're often looking at the best and most cost-effective solution here, which might involve;
Updating the Flats Plan: Determining the cost and feasibility of adding the missing element to the flats plan.
Insurance and Legal Approval: Ensuring that the insurer and solicitor are comfortable with the situation, minimizing risk and uncertainty.
Let us help with advice
Navigating non-consented work scenarios can sometimes be complex and tricky for both real estate agents and clients.
But we're dealing with these issues regularly, and we have a deep understanding of which banks are likely to view certain situations more favorably, as well as considering how any issues might impact you in future.
Get in touch by booking a call or jumping onto our contact us page so you can get things sorted quickly!