Endowment mortgages only make up a fraction of today’s home loans, but those still with endowments need to act now to ensure they are able to pay off their mortgages. A similar situation applies to houses with land that is let to farmers or rented out as paddocks.”A good example of a “difficult” property is Barnham Windmill, near Chichester, which was a flourishing restaurant until recently, when the lease on the car park expired. Now it is on the market at £895,000, awaiting a buyer who can either negotiate a new car-park agreement or find another use for this landmark building. “It can be much more tax efficient because the investment loan is attached to the flat rather than the house. Checkley advises using the legal ploy of splitting the titles of the house and the flat, so the lender can provide a residential loan on the house and investment loan on the flat. “We put the buyer in touch with a specialist lender, and the shop is now a delicatessen,” Checkley says.Similarly, any property with commercial catering facilities may be suspect in lenders’ eyes because it indicates commercial use.Houses with lower ground-floor flats are popular in London because the flat can be rented out.

“We had a nice stone-built property in Chipping Camden with an annexe and a small retail unit, which posed a problem for lenders because if the annexe or the shop were rented out, they may have trouble getting possession if the loan goes bad,” he says.Of course, it was the potential rental income that attracted the buyer. “Once the subsidence had been fixed, he sold it at a good profit,” Checkley says.Properties with self-contained flats, shops on the ground floor or workshops behind can also be difficult to raise money on. “We created separate titles out of the non-subsiding and subsiding parts of the house, and a structural engineer said that the subsiding part would have no effect on the neighbouring property.”The buyer then paid cash for the subsiding wing and borrowed the money for the main house. “It was uninsurable and therefore unmortgageable,” he recalls.The solution was to legally separate the wing from the main house, so that the lender would not be exposed to the risk. An extreme example was a client who wanted to buy a house with a wing that was subsiding. The aim is to provide an alternative source of finance for buyers of the often unusual properties that the up-market agency has on its books.These currently include a derelict country house near Chepstow originally built by the architect Sir John Soane, an underground house in Kent, and a windmill with a restaurant in Sussex.Such properties are often rejected by high-street lenders because all the boxes on the form can’t be ticked, says Checkley.

“In the interests of the borrower and lender, BM does not lend on properties where the rental income is unpredictable, such as non-standard property.”Sticking with standard properties reduces risk and costs, allowing high-street lenders to reduce rates to borrowers, but non-standard or defective properties can represent an opportunity for investors with vision, says Simon Checkley, founder of the financial advisers Private Finance, which last week joined the estate agents Jackson-Stops & Staff. BM requires 125 per cent of the proposed mortgage payments to be covered by the rental yield,” says its spokesperson Carla Lavender. And few will even look at properties with unusual legal restrictions.
Birmingham Midshires, the biggest buy-to-let mortgage provider in the country, has strict criteria on the kinds of properties it lends on: “Our buy-to-let lending is calculated on the predicted rental income of the property. Property investors often face problems raising the money for wrecks they want to do up and sell on. Buildings with separate flats or shops intended for letting are also routinely rejected by high-street mortgage lenders. The property market hates houses that are different in some way.

They are difficult to sell, and when a buyer does appear, they often find it hard to get a mortgage. Although schemes and initiatives differ, there is unanimity on the importance of improving affordability.Affordable-housing websites: www.firstrungnow , www.keyworkerliving.co.uk, www.keyworker-homes.co.uk. The 25 per cent is repaid when the home is re-sold.Barratt Homes has gone further and is lobbying the government to allow it to sell at below-market prices directly to key workers without going through housing associations. The scheme is being trialled at Bolnore Village, a new development in West Sussex.

The combined cost of a conventional mortgage for the 75 per cent and interest-free repayments for the remaining 25 per cent should, in theory, be less than trying to fund the entire purchase from a mainstream mortgage. Crest Nicholson, for example, has a scheme called Easy Buy aimed mainly at first time buyers. It allows someone to own 100 per cent of a new home but pay only 75 per cent of its price at the time of purchase – the rest comes as an interest-free loan from the developer. They work with contractors on the new development and in return receive a “free” 25 per cent share.Now individual private developers are coming up with their own schemes.