- Around 1.5 million UK homes could be declined for a standard mortgage.
- Buyers often face rejection because of the property's condition or construction rather than their finances.
- Lower prices and renovation potential continue to attract buyers despite the financing challenge.
More than 1.5 million homes across the UK could be difficult to buy using a standard mortgage because they fall outside the lending criteria used by many high street banks, according to research by specialist lender Together.
The study estimates that around 6 per cent of Britain's 28 million residential properties are considered "unmortgageable" by mainstream lenders. That means buyers can have an offer accepted, pass affordability checks and still see their mortgage application rejected because of the property's characteristics rather than their own financial position.
Homes with thatched roofs, short leases, solid-wall construction, high-rise locations, proximity to commercial premises, or properties lacking a functioning kitchen or bathroom are among those that lenders may be reluctant to finance through conventional mortgages.
Buyers still see opportunity where lenders see risk
Despite the financing challenges, demand for these properties remains strong. According to the research, 44 per cent of buyers who had purchased or seriously considered buying an unmortgageable property said they believed it offered better value than a conventional home.
Around 31 per cent were attracted by the opportunity to renovate or restore a property, while 28 per cent hoped to increase its value before selling. Another 31 per cent said the potential return justified the risks involved, while 21 per cent believed the rewards outweighed the challenges. Only 12 per cent admitted they had underestimated the difficulties involved.
Lower purchase prices were another major attraction. Around 28 per cent said affordability was the main reason for considering these homes, rising to 32 per cent among buyers purchasing a primary residence. For buy-to-let investors, 35 per cent cited rental income potential as the biggest draw.
Securing finance, however, continues to be the biggest hurdle. The research found 21 per cent of respondents had already experienced a mortgage application being rejected, while 32 per cent said they had access to a much smaller pool of lenders willing to finance their purchase.
Together argues that bringing more of these properties back into the mainstream mortgage market could help ease Britain's housing shortage alongside new housebuilding. Ryan Etchells, chief commercial officer at Together, reportedly said a significant number of homes remain effectively out of reach because many mainstream lenders are unwilling to finance them, adding that these properties represent an often-overlooked part of the UK's wider housing supply challenge.
