All lenders have well-known restrictions with regards to which properties they will lend against and which they won't.
Common restrictions include properties subject to with a flood risk warning or ex-local authority flats.
Properties built on contaminated land are also a no-go for equity release lenders, alongside any property in poor condition, rented out, or those owned under any form of shared equity scheme.
But other restrictions are less obvious, while more specific, and fairly difficult to navigate.
For example, Aviva will not lend on properties with single skin brickwork where it comprises more than 20 per cent of the surface area of the external walls, while More 2 Life has concerns about the percentage of roof slates on a building containing asbestos.
Canada Life told FTAdviser it would not lend on some listed buildings, primarily grade 1 or grade 2, but would consider “timber framed properties” — but only if they were built before 1960.
By comparison, Aviva will not accept timber framed properties built between 1920 and 1965.
Consumers who own a house which has a solar farm on the land or a flat in a block of more than four storeys with no lift would also struggle to secure a loan.
Canada Life said an adviser would have to refer the case to its team if the property had grounds in excess of five acres while Hodge does not lend money on properties situated on land larger than 10 acres.
Invasive plants can scarper a consumer’s hopes of releasing capital from their property as properties where Japanese Knotweed is present would be turned down immediately, according to Aviva.
Nearby commercial property was a common theme among lenders too, with most ruling that any property above or next to any kind of commercial venue would be decided on a case-by-case basis.
Even the amount of clutter or mess in a property could hinder a customer’s chances of receiving the loan, with most lenders saying they took it as a sign of low property maintenance.
More 2 Life said it was a general rule that the valuer must be able to move freely around the property to undertake a basic mortgage valuation, including access to walls.
This was also the case for Aviva, which said an unacceptable amount of stored goods and clutter would rule the valuation to be unacceptable.
Equity release allows people above the age of 55 to unlock the value in their property in return for cash.
This can be done as a lump sum, in regular smaller amounts which incur interest, or as a combination of both. The loan is then paid off when the person dies.
Kay Ingram, director of public policy at LEBC, said lenders wanted to be confident a property value would be maintained so the loan could definitely be repaid.
She said: “Generally we would screen out properties where there is an obvious issue, such as lots of takeaways or late night venues nearby, before making an application to a lender.
“Specialist knowledge can save individuals from making applications which are turned down and knowing the preferences of each lender is part of the service we provide.”
But Alan Lakey, director of Highclere Financial, said equity release lenders were being irrational by refusing to lend on properties that would qualify for a normal mortgage.
He said: “One lender currently will not lend £20,000 on a property worth £600,000 — because there is a petrol station nearby.
“It seems ridiculous considering the £600,000 property is so unlikely to fall below a £20,000 plus interest price tag.”
Mr Lakey also raised concerns that the equity release market lacked the more flexible “niche” lenders the residential market had currently, meaning that a large part of the population may be unable to access equity release products.
He said: “Think about how many houses are in towns with commercial property surrounding them. There’s clearly a gap in the market for lenders who can be flexible in this arena.”
imogen.tew@ft.com
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