Mortgage Strategy for Cladding-Affected Auction Property
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An experienced property investor with a portfolio held in both personal and limited company structures was exploring a potential purchase at auction. The client already owned multiple properties in similar areas and had experience managing rental properties. They were considering a new acquisition within a block of flats in Colchester, Essex, with the intention of either holding it long term or potentially selling later, depending on market conditions and any remediation works required.
The property in question was part of a high – rise block affected by cladding concerns, making mortgage ability uncertain. A key issue was the lack of confirmed EWS1 Form status and unclear remediation plans, which could significantly impact lender appetite. The client was also weighing up auction time constraints, potential financing costs, and whether they could secure lending quickly enough to meet deadlines. Additional complexity came from uncertainty around rental yields, valuation assumptions, and whether the asset would remain viable if regulatory or safety issues persisted.
The adviser explained that lending was possible but highly dependent on the building’s EWS1 Form rating and overall risk profile. Specialist lenders would likely be required, particularly those experienced in non – standard construction or higher – risk blocks. Options discussed included a five-year fixed mortgage product, with the possibility of refinancing or restructuring later once the risk profile became clearer. A backup strategy was also considered: raising capital from an existing unencumbered property via remortgage to fund the purchase outright if required.
A provisional strategy was formed based on a five-year specialist mortgage or alternative funding via remortgage, depending on the outcome of building safety information. Affordability was modelled using conservative interest rate assumptions, showing the deal could be viable if rental income performed as expected. The client also gained clarity on auction timelines, valuation requirements, solicitor involvement, and the costs associated with securing funding through a broker-led process.
This case is notable due to its complexity around building safety regulations, auction time pressure, and layered exit strategies. It required balancing specialist lending criteria with uncertain structural risk tied to cladding remediation. The discussion also involved multiple contingency plans, including refinancing an existing asset, highlighting a flexible and strategic approach to securing funding in a constrained and evolving regulatory environment.
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