Lending criteria

Property Type Definitions: Retirement Housing / Sheltered Accommodation

• There is no legal definition of Retirement Housing, also known as Sheltered Accommodation. The following provides Legal & General Home Finance's view on what it considers as Retirement Housing / Sheltered Accommodation.
• Retirement Housing / Sheltered Accommodation are self-contained homes for sale, shared ownership or rent.
• They will typically have part-time Wardens rather than full-time carers and will provide emergency call systems within each accommodation such as ‘Red Cords’.
• There may be basic facilities such as a launderette, garden, and guest room.
• Sites are typically a combination of properties with between 40-60 units.

• Could be sharing or on separate council tax banding.
• Annexe may be detached or attached to main residence.
• Annexe is either empty at completion or occupied by a maximum of two family members (more than two to be referred) or a contracted live-in carer, each of whom signs a Deed of Consent.
• Annexe to be less than 50% of the main property footprint.

We will not consider:

• Annexes that don't share the same utilities as the main property.
• B&B if there is an annexe.

We will consider:

Annexes with separate council tax banding but must be part of the main legal title and have no separate services. If there is more than two family members in annex, please confirm how old and how many.

All applications are subject to our underwriting and valuations
Must have suitable insurance with no onerous terms or excesses.

We do not accept other Isles; Northern Ireland, Scilly Isles, Isle of Man and the Channel Isles.

Properties:

• Where any part of the property is used for farming (arable or pastoral), providing any form of commercial income including renting of land to other parties
• Where livestock are being kept for commercial purposes
• Small holdings

A single skin wall is a wall of less than 225mm brick thickness. Property's that have elements of single skin walls may be acceptable subject to meeting all the following conditions

• Up to a maximum of 20% of the exterior wall area;
• No adverse structural or damp issues;
• If the Single skin walls are on an upper floor they must be structurally sound i.e. the roof is securely tied in, and
• Saleability and mortgageability must not be adversely affected

• Bedsits / studio flats which are the main residence must have a minimum internal measurement of 30m2 with their own bathroom and kitchen. The kitchen can be in the same room. Max £1million
• Upto 5 storeys with no lift flat must be located on floor 3 or below
• Upto 10 storeys with a lift

All applications are subject to our underwriting and valuations.

Must have suitable insurance with no onerous terms or excesses.

We do not accept other Isles; Northern Ireland, Scilly Isles, Isle of Man and the Channel Isles.

• Flats above 5 storeys with no lift access where the property is on floor 3 or below
• Flats over 10 storey

• Freehold flats
• Flats with no block building insurance
• Bedsits / studios under 30m2
• Ex Local Authority, ex Housing Association or ex Ministry of Defence houses/bungalows/flats/maisonettes where pre-emption conditions have not exceeded clawback period
• Ex-Local Authority Flats above 10 storeys irrespective of the subject property’s location
• Flats above 5 storeys in height with no lift where the subject property is located on the 4th floor or above

Properties under 10 years old must have a New Build Warranty.

The following are acceptable:

• ABC+ Warranty
• Advantage HCI
• Ark Insurance Group
• Build Assure
• Building Life Plans Ltd
• Buildzone
• Checkmate
• Global Home Warranties
• Homeproof (formally known as Aedis)
• International Construction Warranties (ICW)
• NHBC
• One Guarantee
• Premier Guarantee (including LABC Hallmark and LABC New Home Warranties)
• Protek
• Q Assure Build Ltd

£70,000 and over for houses and bungalows

£100,000 for flats, maisonettes, ex-council, ex-housing association or ex-Ministry of Defence properties

All types of flat. Except Freehold flats in England and Wales.

Any Ex local authority properties have a minimum value required of £100,000.

Properties in poor condition, state of repair or in need of full refurbishment

Properties deemed unacceptable by a valuer due to the condition causing adverse impact on saleability

Where spray foam insulation has been removed from the loft space. Removal has been completed by a professional.

A certificate may be required to confirm it has been satisfactorily removed.

Property will be subject to a full inspection and may require a roof report and any repairs required will need to be undertaken prior to completion.

RIO Lending Standards PDF: 284KB

PTLM Lending Standards PDF: 362KB

• The property must be wholly or predominantly classified as residential under planning legislation
• A small proportion of the property can be used for business purposes which solely benefits the applicant
• The surveyor must be able to value the property on a residential basis ignoring any business use.
• The property must be capable of being sold as a standard residence without extensive modification and expense
• The surveyor must be aware of the full usage of the property at the time of instruction

Retirement Interest Only Mortgage (RIO) and Payment Term Lifetime Mortgage (PTLM); Missed Payments

• Secured loans and/or rental payments - No missed payments in 12 months
• No more than one missed payment in the last 24 months
• Unsecured loans - Max one missed payment in the last 12 months

• Applicants need to be up to date with credit commitments.
• Credit and voters roll searches; incorporating a three-year check on the applicant(s) address history will be carried out on all applicants.

RIO and PTLM; County Court Judgements;

• with a maximum of 2 totalling amount <£500
• registered more than 36 months ago 
  * Satisfied within 6 months of registration

PLTM & RIO; Defaults;

• Maximum one registered in the last 36 months
• Total amount not exceeding £150

PTLM & RIO; Bankruptcy/IVA/Sequestration

• Discharge/satisfied for a minimum of 72 months
• No further adverse credit since IVA

IRLM and OPLM; Bankruptcy/IVA/Sequestration

• Discharge/Satisfied before application

PTLM & RIO;

• Applicants with any arrears currently outstanding on any credit commitments

IRLM and OPLM;

• Applicants with any arrears currently outstanding on any credit commitments

PTLM & RIO; Debt Management Plan

• If satisfied for at least 72 months

IRLM and OPLM;

• Debt Management Plan is acceptable

Must be a full and final settlement order in place, ratified by the courts.

The party leaving the property must do so on or before Completion date.

For Lifetime Mortgages; Unmarried cohabiting partners are acceptable with independent legal advice and a Deed of Consent

For Retirement Interest Only Mortgage (RIO); Unmarried cohabiting partners needs to be added to the title deeds and mortgage.

Any percentage split is acceptable for tenants in common.

Where Tenancy in Common, when a joint borrower dies, the remaining party is not able to draw from their drawdown facility until the title has been legally transferred into their sole names.

If family and age 17 and above and live in the property with the applicants;

• Will need independent legal advice.
• Sign a deed of consent (DOC).

There must be no more than two friends residing within the property otherwise this is considered a HMO regardless of the fact they are not paying rent. (DOC required).

Lodgers must not have a tenancy agreement in place.

A lodger must reside in the main residence - for example; not in annexe.

Properties that contain 2 separate kitchens, with 1 for the purpose of a lodger will be declined.

One partner can already be in a care home permanently – that person will need a Power of Attorney.

The majority of the Initial Advance and any Drawdown must be for the benefit of the donor for example; to pay care fees.

Proof from care home confirming residence and care costs will be required.

Donor must have lost mental capacity.

Each applicant must have a different independent Power of Attorney (for example; not the same).

• Health and Welfare Lasting Power of Attorney or Scottish equivalent
• Spousal Lasting Power of Attorney
• Same attorney acting for both applicants; Where joint applicants - one applicant acting for another

Where a third party is named on the title, and they are being removed the third party must receive independent legal advice on the transaction. 

Where the transfer is not for the full value of the third party’s interest in the property then we will require an indemnity policy for transfer at undervalue. 

We are not able to accept consent forms for transfer under value.

Freehold or Leasehold. Absolute ownership in Scotland

For leasehold, age of the youngest applicant at completion, plus remaining lease term, must be at least 175 years

Properties contained within a Retirement Village are considered as eligible for an Legal & General Home Finance product provided they are located in one of the following Retirement Villages:

• Austin Heath, Warwick, Warwickshire
• Gifford Lea, Tattenhall, Cheshire
• Great Alne Park, Maudslay, Warwickshire
• Milbrook Village, Exeter, Devon
• Durrants Village, Faygate, West Sussex

We need to confirm:

• The septic tank is well maintained to 2020 standards.
• How many properties shared.
• If shared maintenance agreement in place.