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Buying land that is contaminated, or property on contaminated land, can be a significant challenge when it comes to securing a competitive mortgage.
A lot depends on the type of contamination, the anticipated cost of remedial works, and how likely it is that the lender could resell the land or property in a repossession scenario.
Lenders will conduct a risk assessment and decide whether the loan is viable depending on these factors.
In this guide, the Revolution Brokers team summarises how mortgages are impacted by the land being contaminated and what questions to expect from a lender. For more advice and help with finding a mortgage for a home on contaminated land, give us a call on 0330 304 3040.
Contaminated land includes any property or land parcel where there are pollution factors, such as chemicals, asbestos, gases, oils, solvents or heavy metals.
Your likelihood of mortgage approval will depend on how severe the contamination issue is and what health risks it poses to people and animals, as well as environmental pollution risks.
Land can become contaminated for many reasons, often due to commercial activities, mines, factories or mills nearby releasing by-products and harmful waste materials. Contaminations can also occur when old buildings have been demolished and may remain present for many years.
For most mortgage applicants, the first thing to do is run an Environmental Search to clarify precisely what the risks are, covering factors such as:
If the Search returns a low-risk result or identifies that there are no dangerous contaminants, you should be able to apply for a mortgage as usual.
Where properties are considered contaminated, a risk status will be assigned, from low to high.
Should you already own the property, you might be required to cover the costs of remediation or cleaning and removing the contamination, as set out by the Environmental Protection Act.
You can also request a Warranty Certificate for the property from the seller. This cover note will provide insurance for the cost of managing or cleaning contaminated land provided it is dated after 1st April 1999.
There are a few options available:
Another option could be to look at a bridging loan for the land purchase, including financing for remediation work costs. When the contamination is removed, it should then be possible to remortgage on a long-term product at regular rates.
The critical factor is to assess exactly the situation, how serious the contamination is, and what can be done to rectify the potential risks and remove the contamination from the land or property.
By working with an independent, whole-of-market broker, you have the best chance of finding mortgage lending, or another suitable borrowing product, to carry out remedial works on contaminated land and improve the saleable value of the property.
To help find mortgages for contaminated land or properties, contact mortgage brokers via email at info@revolutionbrokers.co.uk or give us a call at 0330 304 3040.
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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.
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