Unconventional properties are more about the way a property is built rather than a comment on your lifestyle choices.
Unconventional homes can range from a £150,000 78 square foot studio in a Central London tower block. Which is just big enough for a bed and not much more to a £11.8 million listed three-bedroom apartment housed in the gothic splendour of the capital’s St Pancras Station.
More common are barn or chapel conversions in rural locations across the country.
Regardless of the type of building, they have one thing in common – they are constructed from non-standard materials, like concrete and timber.
Banks and building societies rate unconventional properties as riskier to secure loans against than brick-and-tile homes.
Read on to find out about buying and insuring an unconventional home.
Buying an unconventional home
Unconventional homes are usually sold at auction. A lesson from buyers caught with an unexpected bad deal is to read the legal bundle prepared for the sale by the auctioneers.
This should highlight the materials used in construction and any legal problems that could arise.
Definitely view the property to check for maintenance issues and any repairs that need carrying out.
Buyers may need to set aside extra cash to pay for unforeseen surveys or conveyancing problems as the lawyers pick through the legal bundle.
Mortgages for unconventional properties
Finding a mortgage for an unconventional property is a lot harder than arranging a loan for a standard buy to let home.
Banks and building societies will not lend against properties they consider will have unpredictable rental income, which covers most unconventional homes. This is because properties that are tough to raise money on include homes built from non-standard materials, homes with self-contained flats or properties with shops or workshops beneath them.
The issue for lenders is how to take back the home when other tenants are on the plot.
Portfolio mortgages for professional landlords are another unconventional property workaround.
Most landlords earning £100,000 a year or more have their cash tied up in investments, including property. Taking a portfolio mortgage as one loan across several homes means buyers can raise more cash from spare equity on conventional homes rather than try to stake the money against a home of unconventional construction.
Setting up a mortgage like this can also help when a bargain comes up, as the borrower can move quickly with pre-arranged funds.
Splitting the title
Owners can make unconventional homes more attractive to lenders.
The trick is looking at the plot and the deeds for some room to manoeuvre. Older houses with basement flats are popular in London, but difficult to mortgage. Many owners split the title and take a standard home loan on the house and a buy to let loan on the flat.
This arrangement is financially efficient because of tax relief on the investment mortgage.
To maximise tax relief take as much borrowing as possible against the buy to let home.
Non-standard construction
The UK has around 1.5 million concrete, timber-framed homes or log cabins. They were built as prefabricated emergency homes after Word War 2. They provided somewhere to live for families displaced in the Blitz.
Lenders are not keen on these properties as they can have hidden defects, especially concrete homes that corrode after time.
Building insurance
If you are a cash buyer or manage to find a loan for your unconventional home, the next hurdle is building insurance.
Just as lenders are wary about unconventional homes, so are insurers. The risk is the flaws that come with non-standard construction and the unknown factor is whether previous owners have dispensed the care and attention necessary to keep them free from defects.
Renting an unconventional home
Landlords need to have no worries about renting an unconventional home.
The same laws that apply to any other rental home are the same for unconventional homes.
Buying an unconventional home FAQ
What is an unconventional home?
An unconventional home is built from materials that vary from those used for standard homes.
Standard houses have brick or stone walls with concrete or slate tiled roofs.
Will a buy to let a lender give a mortgage on an unconventional home?
Most mainstream buy to let lenders will refuse loan applications against unconventional properties. But, plenty of specialist lenders are willing to consider them. For more information, try searching the web for ‘unusual property mortgage’.
Where can I search for an unconventional property?
Unusual or character homes are the other names sellers and their estate agents call unconventional homes. Rightmove, OnTheMarket and Zoopla will list these homes. An internet search will also return several smaller, specialist brokers.
Why do banks dislike unconventional home lending?
Lenders fear that if an unconventional home is not properly looked after, the damage could affect the future value should they have to repossess and sell. Because of this, they demand large deposits and charge a higher interest rate.
How do I find unconventional home lenders?
Besides internet searches, you could speak to a local surveyor about lenders who have approved unconventional home loans. It might be advantageous to look into smaller building societies. As they will know if unusual homes are common in the area and less averse to the risk as they deal with non-standard construction more often.
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