CML: Will mortgage lenders lend on commonhold? No. Yes. Maybe … er

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Council of Mortgage Lenders, CML, lists banks lending on commonhold title.

Commonhold tenure was introduced in 2002 as a welcome alternative to leasehold but there was very little take up.

Given the lucrative racket involved in selling freeholds, with its ground rent and other dubious incomes, developers were never going to give up voluntarily a cherry on the cake.

Instead, in the frenzy of the boom, they flogged their freeholds to the highest bidders – often Vincent Tchenguiz – and then seemed to be a bit surprised that their unfortunate former customers blamed the developers for the fallout.

Property legend Tony Pidgley still winces at the memory of this self-inflicted wound to the reputation of the Berkeley Group.

Less rational was the lukewarm response of mortgage lenders.

Commonhold is a far more secure title than leasehold, so why not lend against it? The CML does not give the reasons, but it does list the banks prepared to do so, and those which are not.

Given that there is a terracotta army of lawyers and surveyors, whose livelihood and private school fees all depend on English flat ownership not working very well under leasehold, one has to assume the banks could not lend in the face of no enthusiasm from the professions.

Under these circumstances, perhaps it is less a surprise that few banks issue mortgages on commonhold, than that any do at all.

Above is the CML list of lenders and their responses.

(It is amusing to see that Royal Bank of Scotland won’t lend on commonhold, when it in fact owned the altogether commendable Spire View commonhold site in Pickering, in Yorkshire).