What Makes a Property Uninhabitable?

Many people are on the hunt for a “doer-upper”. The thought of finding a run-down wreck and converting it into the home of our dreams appeals to many homebuyers and property investors. This concept has only become more appealing after the rising popularity of shows like Homes Under The Hammer!

However, before you go out there and start offering on empty shells with damp walls and no carpets, there are a few things you need to know. Things that will tell you if it’s possible to get a mortgage on a property, or if it’s something a lender will not touch.

What Makes a Property Unmortgageable?

There are many reasons why a property can be unmortgageable. For example, there could be a boundary issue, or the property could be near a landfill. However, for the purpose of this article, we are going to focus on uninhabitable properties, which are a type of building you cannot get a mortgage on.

An uninhabitable property is one that cannot be lived in or cannot have an income generated from it. I.e., an income cannot be generated because it would be impossible for a tenant to comfortably live there.

Mortgage providers won’t lend on these types of properties because it is a risk to them. For example, what if no work is done to the property and it decreases in value over the years?

What Makes a Property Uninhabitable?

For a property to be habitable, it must be structurally sound, and you must be able to live in it comfortably.

If a property has structural issues, then it will not be eligible for a mortgage. These kinds of issues are typically picked up on a survey unless there is something obvious that meets the eye. If you are trying to get a mortgage on a property like this, then you’ll need to fix the structural issues first. Bridging finance could give you the funds needed to do this.

Another reason a property would be uninhabitable is if it did not meet the Health and Safety Standards or if it does not provide basic amenities, like running water.

Reasons a property would be uninhabitable include:

  1. No running water/ no gas
  2. No kitchen or bathroom, or a kitchen/bathroom that is in a state of disrepair
  3. Infestations of pests or vermin
  4. Extreme mould or damp
  5. Fire risks/lack of fire safety measures

A finance provider may also neglect to mortgage a property if major repairs are needed. However, these repairs must add up. For example, a rewire on its own would not be enough to classify a property as unmortgageable. But if a property needs a rewire, tiles replaced on the roof, and has no heating, then it is unlikely a mortgage provider will finance it.

How Can You Buy an Uninhabitable Property?

You can still buy uninhabitable properties with cash. This doesn’t have to be your cash. You can use private finance, also known as investor finance, if you plan to use the building as an investment.

Alternatively, you can use bridging finance to fund the purchase until the work is done. Once the work has been completed and the property is habitable, you can then mortgage it.

Why Buy an Uninhabitable Property?

Uninhabitable properties have the potential to have their value increased through refurbishment. Then, the property can be sold for a profit, refinanced, or rented out. Some people like the idea of putting their own stamp on their home, shaping it how they envision it.

We can help you with all aspects of funding, from providing bridging finance for an uninhabitable property to mortgaging it once it has been refurbished.

Book your free consultation with us by clicking here. We’ll set you up with a mortgage in principle and help you buy your “doer-upper”. Whether you’re a home hunter or an investor, we’re here to help, so book your free consultation today.