Bargain or Burden? Decoding "Too Good to Be True" Property Deals

Have you ever stumbled upon a property listing that seemed like an unbelievable bargain on popular platforms like Zoopla or Rightmove? The temptation to seize such a golden opportunity is strong, but beware – some properties are cheap for a reason. Armed with the right knowledge, you can decide whether to dive deeper into these deals or steer clear of potential pitfalls.

1. The Leasehold Dilemma: One common reason for low-priced properties is that they are leasehold with limited years left on the lease. If there are fewer than 65 years remaining, securing a mortgage becomes nearly impossible. Regardless of the property's charm or location, lenders perceive this as high risk and weak security, leading to limited mortgage options.

2. Structural Woes and Hidden Repairs: Another red flag could be major repair issues like subsidence or structural problems. Sellers may be hoping to pass these problems onto unsuspecting buyers. Unfortunately, the burden of investigating the property falls on the buyer, as the law places the responsibility on them to conduct due diligence. Some sellers may not disclose such issues, leaving the buyer with an unwelcome surprise.

3. Non-Standard Construction: Houses, in particular, built with non-standard construction materials (built with anything other than bricks and mortar), such as concrete panels, wooden frames or alternative building systems, are often advertised below market value. Many mortgage lenders are wary of such homes because of common defects which are known with some of these construction types, making it challenging to secure a mortgage offer, and if possible, it may come at a higher interest rate cost, due to the higher risk of the property as security.

4. Unmortgageable Factors: Some properties may be deemed uninhabitable due to their poor condition, making them ineligible for mortgages. Issues like cladding problems can also cause mortgage lenders to reject a property. Additionally, certain properties may be too small to meet mortgage lender's minimum size criteria (300 sqf or 27.8 m2), leaving cash as the only payment option. And then there is where the property is located. Above a coal mine, above a takeaway or on a landfill, all could impact on whether the property is mortgageable.

These are just a few of the more common reasons why properties might be deceptively cheap. Empower yourself with knowledge to distinguish between potential bargains worth pursuing and pitfalls best avoided. As you embark on your journey to find your dream home, being informed will ensure you don't unknowingly end up with a lemon.

Empowering you as you hunt for your first home.