A new research from the ONS and Land Registry found that areas where there are more self-employed people are seeing an increase in house prices. However, experts warn that many self-employed residents in these areas may struggle to capitalise on this local property boom because they can’t get a mortgage from their bank.
“While buying at a time of steeply-rising house prices could offer self-employed workers more financial security, many would-be borrowers in these areas are missing out on this significant opportunity because they can’t get a mortgage from their banks,” said Richard Tugwell, group intermediary director at Together. “Unfortunately, the self-employed – who might have irregular income or a shorter trading history – are often victims here, being deemed as ‘too high risk’ for many high street banks to lend to.”
The country’s biggest self-employed area, with nearly a quarter of its workforce running their own business, is Three Rivers district in Hertfordshire. There, houses have seen a substantial rise of 9.6% in prices over the past two years. The second area with the highest concentration of self-employed people is Chiltern district in Buckinghamshire, where 22.3% of residents work for themselves. Property values in this area witnessed a staggering increase of 15.6% over the past two years; more than twice the national average.
“The small number of successful mortgage applicants who are self-employed is indicative of the mainstream banks’ general reluctance to lend to this group. Thankfully, specialist lenders like Together do things differently, looking at each mortgage application on a case-by-case basis while using our common sense approach to lending decisions, even in the most complex of situations,” added Richard.
There are currently around 4.8 million self-employed workers in the UK, which represents 15% of the total UK workforce. In the first half of 2017, according to the latest FCA data, only 58,329 mortgages were taken out by self-employed workers, suggesting that entrepreneurs are finding it more difficult to take out mortgage finance compared to the rest of the population.
