New Build Flats vs Houses

Discover how getting a mortgage for a new build flat differs from a house.

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Mike Morris

Mortgage & Protection Specialist

Knows About: New Build Flats vs Houses

New Build Flats vs Houses

Buying a new home is an exciting milestone, and choosing a new build flat can offer a fresh and modern start. However, getting a mortgage for a flat can sometimes involve a few different rules compared to buying a house.

Our team understands that you probably have questions about how lenders work out what they can offer you. Below, Mike Morris looks at the details that matter most, from loan-to-value (LTV) limits and lease lengths to service charges and building safety, helping you take your next steps with confidence.

Why are lenders more cautious about new build flats than new build houses?

Lenders often view new build flats as carrying a little more risk. This is because there can be a higher supply of similar properties in the same development, which may affect future resale values.

Flats also come with additional considerations. These include leasehold arrangements, service charges, and building management.

What loan-to-value can you typically get on a new build flat versus a new build house?

The maximum loan-to-value (LTV) varies between lenders, but you will generally find more lenders willing to offer higher LTV mortgages on new build houses rather than on flats. It is always worth speaking to a broker, because criteria can differ significantly from one lender to another.

On a new build house, you can quite commonly get up to a 95% LTV mortgage. For a new build flat, although there are a couple of options at 95%, lenders typically sit more between 85% and 90% LTV maximum.

How does leasehold affect a new build flat mortgage, and what lease length do lenders want?

Most new build flats are leasehold, so lenders will want to ensure the lease meets their requirements.

A long lease is usually preferred, often with well over a hundred years remaining, as this helps protect the property’s future value and marketability.

What are service charges and ground rent, and do lenders include them in affordability?

Service charges are payments towards the upkeep of communal areas and facilities. Ground rent is a payment that may be due to the freeholder.

Lenders will usually take these costs into account when assessing affordability. Because they are ongoing commitments alongside the mortgage, they may affect how much you can borrow.

Does cladding or building safety still affect new build flat mortgages?

Building safety remains an important consideration, particularly for larger apartment blocks.

Lenders will want reassurance that the building complies with current regulations and that any necessary safety documentation is available.

Speak To an Expert

Contact us for a fee-free initial consultation, our team of mortgage and financial experts is here to help. There may be a fee for arranging a buy-to-let mortgage, and the exact amount will depend on your specific circumstances. Typically, we do not charge a fee for residential mortgage advice.

How do lenders treat new build flats above commercial premises?

Some lenders are happy to consider flats above shops or commercial units, while others may be more restrictive.

The type of business operating below can be important, as lenders may have concerns about noise, future saleability, and perceived risk.

Is it harder to remortgage a new build flat later, and why?

It is not necessarily harder, but it can depend on how the property’s value has performed since purchase and whether there have been any issues with the building.

If the flat has held its value well and meets lender criteria, remortgaging is often straightforward.

Do new build houses hold value better than new build flats, and does that matter to a lender?

Every property and local market is different. Historically, houses have often shown stronger long-term demand than flats in many areas.

Lenders do consider future saleability. This is one reason they may sometimes take a more cautious view on flats.

Can you buy a new build flat as a buy-to-let, and which lenders allow it?

Many lenders offer buy-to-let mortgages on new build flats, although criteria can be stricter than for standard properties. The choice of lender will depend on factors such as the deposit available, expected rental income, and the details of the development.

What should you ask the developer before reserving a new build flat?

Ask about the service charges, any ground rent, and the length of the lease. You should also check the warranty provider and the expected completion date.

It is worth finding out what incentives are being offered. You should also check whether there are any future phases of development planned nearby that could affect the property or surrounding area.

Summary

When you are looking to buy a new build property, lenders often take a more cautious approach to flats compared to houses. Our advisers know that factors like leasehold rules, service charges, and building safety can all influence how much you can borrow and which lenders are open to helping you.

Whether you want to live in the property or buy it as an investment, understanding these differences helps you prepare. Speaking to our team early on means we can guide you through the options and help you find the right mortgage for your needs.

Key Points

Lenders usually offer lower maximum loan-to-value amounts for new build flats, often between 85% and 90%, compared to up to 95% for new build houses.
Leasehold details matter to lenders, and they generally prefer properties with a long remaining lease well over a hundred years.
Ongoing costs like service charges and ground rent are factored into affordability checks, which can affect your total borrowing amount.
Building safety documents and compliance with current regulations are essential for larger apartment blocks.
Flats above commercial premises can be harder to finance depending on the type of business below and the specific lender rules.
Buy-to-let mortgages are available for new build flats, but lenders often apply stricter criteria.
Always ask the developer about lease lengths, service charges, ground rent, warranties, and future building phases before you reserve a flat.
Our team is always here to help you compare lenders and find the right mortgage deal for your new build purchase.

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