If two buyers in a row have been declined, the problem is probably not the buyers. When a lender turns down a mortgage, it is assessing two separate things: whether the borrower can afford it, and whether the property i
acceptable security. A property can fail the second test no matter how good the buyer is.
Estate agents describe these properties as difficult. Lenders describe them as unsuitable security. Either way, your buyer pool shrinks to people paying cash, and until you know which issue you have, you cannot make a sensible decision about what to do next.
The usual causes
01
Lease length
Leasehold flats and some houses become progressively harder to mortgage as the term runs down. Many lenders want at least seventy years remaining at the start of the mortgage, and some want the term to exceed the mortgage term by a comfortable margin. Under sixty years, mainstream lending largely stops.
Can it be fixed: yes, by extending the lease, but the cost rises sharply once the term drops below eighty years because marriage value becomes payable. At eighty two years, extending now rather than in three years is worth serious thought.
02
Cladding and building safety on flats
Flats in blocks with combustible cladding, or blocks where the building safety position has not been documented, have been difficult to mortgage since 2017. Lenders want evidence of the building’s fire safety status and remediation position before lending.
Can it be fixed: not by you directly. Your position depends on paperwork held by the freeholder or managing agent. Chase them in writing and keep the record.
03
Unusual construction
Standard construction means brick or block with a cavity, and a tiled or slated pitched roof. Anything else invites questions.
Types that commonly cause problems include prefabricated reinforced concrete houses, particularly designated defective types such as Airey and Cornish Unit, steel framed houses, timber framed properties with certain cladding, single skin brick walls, thatched roofs, cob and other earth construction, concrete panel construction, and properties in Cornwall built with mundic block.
Can it be fixed: not changed, but some types are mortgageable through specialist lenders with a structural engineer’s report. Others are effectively cash purchases only.
04
Structural movement
Cracking, subsidence, heave or historic underpinning. Lenders will usually want a structural engineer’s report, evidence of monitoring, and confirmation that the cause has been resolved. Where a property has been underpinned they will also want the insurance history, because ongoing insurability at reasonable cost affects the security.
Can it be fixed: a resolved and documented case, yes. An unresolved one is among the hardest to sell around, because your buyer cannot get insurance easily either.
05
Spray foam insulation in the roof
One of the most common reasons for a declined mortgage in recent years. Closed cell spray foam applied to the underside of roof tiles restricts ventilation, can trap moisture, and prevents a surveyor from inspecting the timbers underneath. Many lenders now decline outright rather than asking for a report.
Can it be fixed: removal is possible but costs several thousand pounds and can damage the roof covering. Get a specialist inspection first, because open cell foam applied correctly is sometimes acceptable where closed cell foam is not.
06
Japanese knotweed
Lenders take a risk based view depending on proximity to the building. Knotweed close to the property has historically triggered caution, though the assessment is now more nuanced than a simple distance rule.
Can it be fixed: usually yes. Most lenders want a management plan from a specialist contractor with an insurance backed guarantee, typically running five or ten years. With that in place, most will lend.
07
Damp, rot and timber decay
A survey that flags rising damp, penetrating damp, wet rot or dry rot may result in a retention, where the lender holds back part of the advance until the work is done. That is a problem for a buyer who needs the full amount to complete. Widespread damp across several rooms, or dry rot with active fungal growth, can produce a decline rather than a retention.
Can it be fixed: yes, with a specialist report and remedial work under guarantee. Get the cause diagnosed properly, because treating the symptom leaves the next surveyor with the same finding.
08
Missing building regulations or planning consent
An extension, a loft conversion, a garage conversion, replacement windows or a knocked through wall done without approval will show up in searches or in the property information forms.
Can it be fixed: usually. Options are a regularisation certificate from the local authority, or indemnity insurance where the work is old enough that enforcement is unlikely. Which applies depends on the age of the work and whether it is safe.
09
Flying freehold and defective title
A flying freehold exists where part of your property sits above land belonging to someone else, such as a room over a shared passageway. Lenders worry about access for repairs and enforceability of maintenance obligations. Other title problems include absent landlords, unregistered land, missing rights of access, and breached restrictive covenants.
Can it be fixed: often, with indemnity insurance. Many lenders accept it, some will not, and where the flying freehold covers a large proportion of the floor area the objection is harder to overcome.
10
Property above or next to commercial premises
Flats above shops are lendable, but flats above certain commercial uses are not. Takeaways, restaurants, pubs and launderettes are common exclusions, because of smell, noise, fire risk and resale concerns.
Can it be fixed: no, but criteria vary widely between lenders, so a broker who deals with unusual security is worth finding before you assume the worst.
11
Small studio flats and unusual layouts
Many lenders apply a minimum floor area and decline below it. Studio flats without a separate bathroom, properties with no windows in habitable rooms, and flats accessed by external deck walkways in some blocks all attract restrictions.
Can it be fixed: no. These properties trade in a cash and specialist lending market, and pricing needs to reflect that from the start.
12
Uninhabitable condition
A property with no working kitchen or bathroom, no functioning heating, or no safe electrical supply may be classed as not currently habitable and therefore unsuitable as security. This affects a lot of probate properties and repossessions.
Can it be fixed: yes, by doing the work, though funding it on an empty property you are trying to sell is the difficulty. Bridging finance and cash sale are the usual alternatives.
How to find out which one applies to you
If you do not yet know why buyers are being declined, do this in order.
Ask your solicitor and agent for the actual reason given by the lender, in writing if possible. Buyers are often vague and agents often soften it, but the surveyor’s concern is usually specific.
Then commission a survey yourself. Paying for a level three building survey on your own property feels counterintuitive, but if you have lost two sales to the same issue, a few hundred pounds to identify it is cheaper than another four months of guessing.
Your options once you know
Fix it
Best route where the cost is proportionate and the fix is definitive. Lease extension, knotweed treatment plan, regularisation certificate, damp works, spray foam removal. You spend money and time, and afterwards you sell to the whole market at full value.
Find a specialist lender
Some issues are declined by mainstream lenders and accepted by specialists, often at a higher rate and with a supporting report. Steel framed houses, some concrete construction and flying freeholds fall into this category. Your buyer needs to be the one making that application, so point them towards a broker who handles unusual security.
Insure around it
Indemnity insurance is a recognised solution for missing consents and certain title defects. It is cheap and it satisfies many lenders. It does not fix the underlying issue, which is worth understanding before you rely on it.
Price for a cash market
Accept that your buyers are investors, developers and cash purchasers, and market accordingly. Auction can work well here, because it puts the property in front of exactly those buyers and creates competition between them.
Sell to a cash buyer directly
The straightforward route when the defect cannot be fixed economically, or when you do not have the time to fix it.
Where a direct cash sale fits
House Buy Fast buys with our own funds, so there is no lender involved and therefore no survey that can end the transaction. We buy properties with spray foam, short leases, structural movement, knotweed, missing consents and construction types that mainstream lenders will not touch. We can usually complete within one to three weeks, or later if you prefer.
The trade off is honest: a cash offer is below full market value. For a property that any lender would accept, that discount is unlikely to be worth taking and you should stay on the open market.
For a property that no lender will accept, the comparison is not against full market value at all. It is against what you would actually achieve selling to the cash market anyway, minus agent fees, minus several more months of holding costs, and minus the risk of another collapsed sale. That is a different sum, and it is often closer than sellers expect.
Find out what we would pay
Tell us what the survey found and we will give you a figure. No cost, no obligation to accept it.
It means a lender will not accept the property as security for a loan, regardless of the borrower. The property may be perfectly habitable. The issue is the lender’s view of its condition, tenure, construction or resale prospects.
Can I sell a house that no lender will mortgage?
Yes, to a cash buyer. That includes investors, developers, auction buyers and companies that buy directly. You cannot sell it to a buyer who needs a mortgage until the underlying issue is resolved.
Does a failed mortgage valuation mean the house is worthless?
No. A decline is a decision about suitability as security. A downvaluation is different again, and simply means the surveyor put a lower figure on it than the agreed price.
Will fixing the problem get me full market value?
Usually yes, if the fix is documented and definitive. The question is whether the cost and the delay are worth the difference, and that depends on the property and on your timescale.
Do cash buyers pay less for unmortgageable property?
Any buyer pays less where there is a defect, because the defect has a cost. The useful comparison is not against a hypothetical full price, but against what you would net from the cash market after fees, holding costs and time.
