About 1.5 million homes across Britain may fall outside mainstream mortgage criteria, according to research from specialist lender Together.
The properties, representing about 6% of the UK’s 28 million homes, can be rejected because of features including thatched roofs, solid walls, short leases or their proximity to commercial premises.
High-rise flats and homes without working kitchens or bathrooms may also fail to meet the criteria used by high street lenders, leaving buyers unable to obtain a standard mortgage after an offer has been accepted.
However, Together’s research suggests that some buyers regard these properties as an opportunity to secure better value or undertake renovation work.
Among respondents who had bought or seriously considered buying such a home, 44% said it was more affordable and offered better value than a conventional property.
Almost a third, at 31%, wanted a renovation or restoration project, while 28% saw an opportunity to add value before selling the property for a profit.
A further 31% said they recognised that the purchase would be difficult but believed it would be worthwhile. More than one in five, at 21%, said the potential rewards outweighed the risks, while 19% were prepared to take a chance that others would not.
Only 12% said they had initially underestimated the challenge or had not been fully aware of the risks.
The lower purchase price was the main attraction for 28% of buyers, rising to 32% among those purchasing the property as their main residence. Among buy-to-let investors, 35% identified potential rental income as the principal attraction.
Securing finance nevertheless remained a significant obstacle. More than one in five prospective buyers, at 21%, had experienced a rejected mortgage application, while 32% found that only a limited number of lenders would consider the property.
Together said restrictive lending criteria could leave habitable homes, including some in desirable locations, harder to buy and renovate. The lender argued that improving access to specialist finance could help return more existing properties to active use as Britain seeks to increase housing supply.
Ryan Etchells, chief commercial officer at Together, said: “One of the less visible challenges facing the UK property market is the sheer number of properties that mainstream lenders are reluctant to finance.
“That means a significant number of homes are effectively out of reach for ordinary buyers. While they don’t feature in official housing shortage figures, they represent part of the wider supply problem and highlight the scale of investment needed to bring more homes back into the ‘mortgageable’ market.
“The good news is that there is a strong appetite among buyers who are prepared to take on these properties and invest in improvements. However, many are still unaware of the alternative finance options available to them.
“Greater awareness would help reduce declined applications and make it easier for people to unlock the potential of homes that traditional lenders often turn away from.”
