Approximately 1.5 million properties in the UK are considered too risky for standard mortgages by mainstream lenders, representing 6% of the total housing stock, according to research from specialist lender Together.
The properties, which include thatched cottages, high-rise apartments, homes located too close to commercial premises, or those lacking functional kitchens or bathrooms, fail to meet traditional lending criteria and are frequently rejected by banks’ automated assessment systems.
Rejection rates
Together’s research found that 21% of buyers have experienced a mortgage application rejection, while 32% encountered a significantly reduced pool of lenders willing to consider their case. The findings highlight a structural issue within the UK housing market that extends beyond current market conditions.
Despite these obstacles, buyers continue to pursue such properties. The research indicates that 31% were seeking renovation or restoration projects, whilst 28% viewed the properties as opportunities to add value before reselling. Lower purchase prices attracted 28% of buyers overall, rising to 32% among those purchasing the property as their main residence.
Investment potential
Rental income potential also drives demand, with 35% acquiring these properties as buy-to-let investments. The trend comes as property transactions face extended completion times, adding further complexity to the purchasing process.
Ryan Etchells, Chief Commercial Officer at Together, stated: “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.”
He added that whilst these properties do not 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.
Market implications
The research suggests that the 1.5 million properties excluded from standard mortgage products represent both a challenge and opportunity within the housing sector. For investors and buyers willing to navigate specialist lending routes, these properties offer potential entry points at lower price points, though they typically require additional capital for improvements to meet standard lending criteria.
