More than 1.5 million UK properties are effectively unmortgageable, according to new research, with buy-to-let investors increasingly targeting the sector for rental income and renovation profit.
Research from specialist lender Together found 1.5 million homes, around 6% of the UK's 28 million residential properties, would be rejected by many high street banks for failing to meet traditional lending criteria. Thatched roofs, solid walls, short leases, high-rise construction and homes situated too close to commercial premises are among the factors that can trigger rejection under banks' automated lending processes.
For buyers, the impact can be significant: a property is identified, an offer accepted, and a mortgage application halted purely because of the type of property involved.
Despite the lending barriers, a substantial proportion of buyers remain determined to secure these properties. Among those who have purchased or seriously considered doing so, 44% said the property represented better value for money than a traditional home. Almost a third, 31%, were looking for a renovation or restoration project, while 28% saw an opportunity to add value and sell on for profit later.
Risk appetite plays a role too. Just under a third of buyers, 31%, said they knew the purchase would be difficult but worth it, while 21% said the rewards outweighed the risks. Nearly one in five, 19%, said they were willing to take a chance that others weren't, and 12% admitted they either underestimated the challenge or weren't fully aware of the risks going in.
For buy-to-let investors specifically, rental income potential stood out as the primary motivation, cited by 35% of those purchasing unmortgageable homes as an investment. Among buyers purchasing a property as their main residence, meanwhile, 32% pointed to the lower purchase price as the biggest attraction, against 28% across the full sample.
Securing finance remains the central obstacle. Together's research found that:
- 21% of buyers had already had a mortgage application rejected
- 32% found themselves navigating a significantly reduced pool of willing lenders
- 6% of the UK's residential stock, roughly 1.5 million homes, falls outside mainstream lending criteria
Properties that are habitable and often well located can become effectively inaccessible once they fall outside the narrow criteria used by mainstream banks, leaving a substantial portion of Britain's housing stock harder to buy, renovate and bring back into use.
Industry figures argue that bringing existing properties back into circulation could ease pressure on housing supply alongside large-scale housebuilding. The UK's 1.5 million unmortgageable homes represent a pool of housing that, with investment and more flexible finance options, could be brought back into the mortgageable market.
"One of the less visible challenges facing the UK property market is the sheer number of properties that mainstream lenders are reluctant to finance," said Ryan Etchells, chief commercial officer at Together.
"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."
