More than 1.5 million homes across the UK could be declined for a standard mortgage by high street lenders because they fall outside traditional lending criteria, according to research from Together.
The study estimates that around 6% of the UK’s 28 million residential properties would struggle to secure mainstream mortgage finance due to factors such as construction type, lease length or condition.
Properties including thatched cottages, high-rise flats, homes located close to commercial premises, or those without functioning kitchens or bathrooms are among those that lenders may classify as “unmortgageable”.
For prospective buyers, this can mean having an offer accepted only for a mortgage application to be rejected because of the property’s characteristics rather than the buyer’s financial circumstances.
Despite these challenges, Together’s research suggests there is strong demand for such properties, particularly among buyers seeking lower purchase prices or renovation opportunities.
Among respondents who had purchased or seriously considered buying an unmortgageable property, 44% said they believed the home offered better value for money than a more traditional property. Nearly a third (31%) were motivated by the opportunity to renovate or restore a property, while 28% said they hoped to add value before selling it for a profit.
The research also found that 31% of buyers were attracted by what they viewed as a worthwhile risk-to-reward ratio, despite expecting the process to be challenging. A further 21% believed the potential rewards outweighed the risks, while 19% said they were willing to take on a property that others might avoid. Just 12% admitted they had underestimated the challenges or were unaware of the risks involved.
Investment potential was another significant factor. More than a quarter (28%) cited the lower purchase price as the main attraction, rising to 32% among those buying a property as their primary residence. For buy-to-let investors, 35% said the prospect of rental income was the biggest incentive.
However, securing finance remains a major obstacle. More than one in five respondents (21%) said they had already experienced a mortgage application being rejected, while almost a third (32%) reported having access to a much smaller pool of lenders willing to consider their application.
According to Together, the result is that many properties which are otherwise habitable and located in desirable areas remain difficult to buy because they do not meet the lending criteria used by many mainstream banks.
The findings come as policymakers continue to debate how to address the UK’s housing shortage. Together argues that alongside building new homes, bringing existing properties back into use could help increase housing supply, provided buyers have access to more flexible finance.
Together chief commercial officer Ryan Etchells 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.”
