1.5 Million UK Homes May Fail Standard Mortgage Checks — London Landlords Should Review Lease Lengths, High-Rise Flats and Homes Above Shops Now

Around 1.5 million UK homes — about 6% of the housing stock — may fall outside standard mortgage criteria, according to Together research reported by Mortgage Strategy. That is not a change in law. It is a market warning: London landlords who do not check mortgageability before marketing or refinancing risk failed sales, a smaller buyer pool and more expensive remortgages.

The London properties most exposed

The categories flagged in the report will be familiar across the capital: short-lease flats, high-rise or ex-local authority blocks, homes above or beside commercial premises, and properties without a functioning kitchen or bathroom.

None is automatically unmortgageable. But each can reduce the number of mainstream lenders willing to lend. A flat can let perfectly well and still struggle on resale or refinance because the lease is short, the block falls outside a lender's policy, or the unit sits above a takeaway or parade of shops.

Why landlords should care now

This is not just a sales issue. It is a refinancing risk.

If your fixed rate ends in the next 6 to 12 months, a property with a short lease, unusual block profile or commercial adjacency may face a smaller lender panel than expected. That can mean higher rates, lower loan-to-value limits, delays, or in the worst case a drift onto the lender's reversion rate while a replacement loan is arranged.

In London, where borrowing levels are often higher, even a modest shift in valuation or lender appetite can materially affect cash flow.

Short leases are the easiest problem to catch early

Lease length is one of the simplest red flags to verify and one of the most damaging to ignore. The source material does not set a universal cut-off, because lenders vary, but under 85 years is a sensible internal trigger for further review.

Before a leasehold property goes to market, landlords and agents should confirm the exact unexpired term from the title and lease documents, not from an old memorandum or the owner's estimate. If a lease extension has started, describe the position accurately. If it has not, do not market the extension as easy or inexpensive.

Condition can shut out mainstream lenders

A property without a working kitchen or bathroom may still attract cash buyers or specialist finance, but many mainstream lenders will not lend in that condition.

If a vacant flat needs a full strip-out, market it accordingly. If relatively modest works could restore standard mortgageability, get costed quotes before launch so buyers and brokers can assess the route back to conventional lending.

Add a mortgageability check before marketing or remortgaging

For any planned sale, purchase or remortgage, gather these points at the outset:

1. Lease length
2. Construction type
3. Block height or building form
4. Whether the property is above or beside commercial premises
5. Whether the kitchen and bathroom are fully functioning
6. Whether existing mortgage or insurance terms could be affected by alterations or refurbishment

The key is to do a criteria check, not just a rate search. A cheap headline product is irrelevant if the property does not fit the lender's rules.

Change the marketing strategy if lender appetite may be limited

Where mainstream lending could be restricted, disclosure needs to be precise from day one.

State the lease term clearly. Say if the flat is above retail or food premises. If the property is only suitable after refurbishment, make that plain in the particulars. The aim is not to stigmatise the asset, but to stop buyers, brokers and valuers discovering the problem after survey and legal costs have already been spent.

A candid listing usually protects value better than a collapsed transaction three weeks later.

Portfolio landlords should map refinance exposure

Landlords with ex-local authority flats, units over shops, non-standard construction or shortening leases should review refinance dates across the portfolio now.

A single-property landlord may only need an early conversation with a broker. A portfolio borrower may need a staged plan if several loans mature within the same period and some assets no longer fit mainstream buy-to-let criteria.

Three actions to take now

• Add a mortgageability red-flag section to your pre-marketing checklist covering lease term, block type, commercial proximity and basic amenities
• Check any remortgage due in the next 6 to 12 months with a broker against property criteria as well as pricing
• Correct your sales particulars and internal files now for any short-lease, high-rise, above-shop or refurbishment stock

There is no new regulation here, but there is a clear operational risk. In a tighter lending market, early mortgageability checks are no longer optional admin; they are part of protecting price, timing and deal certainty.

R&S can help by reviewing your listing or refinance pipeline, flagging mortgageability risks early and connecting you with brokers and agents who know how to position harder-to-finance London stock.