But savvy buyers are snapping them up when they can access finance

More than 1.5 million homes across the UK fail to fit the traditional lending criteria of high street lenders, a figure equivalent to around 6% of the UK’s 28 million residential properties.

However, it is opening up opportunities for buyers who want the lower prices and investment opportunities such properties can offer when buyers are able to access specialist finance, according to Together.

Its research showed that thatched cottages, high rise apartments, homes too close to commercial premises or homes without workable kitchens or bathrooms may all be considered unmortgageable by banks’ automated processes.

Yet many buyers favour such properties, with 44% of those who had purchased or strongly considered such a property, saying that it was more affordable and better value for money than buying a “traditional home”.

Lower purchase prices mark biggest attraction

Over a quarter (28%) of buyers cite the lower purchase price as the biggest attraction, rising to 32% for those purchasing the property as their main residence.

Rental income potential is the main attraction for more than a third (35%) of those purchasing homes as a buy-to-let investment.

Almost a third (31%) of buyers of such properties were looking for a renovation or restoration project, while 28% saw an opportunity to add value and sell on the property later for profit.

Just under a third were motivated by the risk-to-reward ratio, with 31% admitting they knew it would be difficult but worth it. Over a fifth (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 just 12% admitted they either underestimated the challenge involved or weren’t fully aware of the risks at first.

However, more than one in five buyers (21%) had already had a mortgage application rejected, while almost a third (32%) said less lenders were willing to consider them.

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. 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.”