Perceived fire risks block mortgage application

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People wanting to buy ex-housing association flats in West Yorkshire have been turned down for a mortgage because of what the lender considered to be unacceptable fire risks.

Genesis Housing Association offered 50 flats for sale in Richmond House in Leeds. A couple who applied for a mortgage for a flat was turned down for two reasons – Richmond House has no fire sprinkler system and was considered unsafe, and also the ground floor of the block has been designated for commercial use, but there is no tenant yet. The mortgage lender needed confirmation of what type of business would occupy the ground floor in case it was a fire risk.

The fire at Grenfell Tower last June focused the world’s media on the issue of fire safety. The mortgage refusal at Richmond House shows that mortgage lenders are concerned about fire safety.

Genesis pointed out that Richmond House follows all current fire regulations. Sprinklers are not required by law in the building. They said that the mortgage lender was applying their own fire safety criteria, which were stricter than that required by the law.

When applying for a commercial mortgage, a valuation inspection will be made. This is primarily to find the value of the property and the likely rents that can be charged. It is not an in-depth structural survey. The buyer can arrange for a survey and this will highlight any fire risks in the building. A landlord of commercial property is responsible for it being in a safe condition.

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