Thousands of potential homes are lying derelict because of tight mortgage lending rules, according to property finance experts.

Property specialists and developers are reporting a rise in the number of mortgage refusals on derelict properties in need of refurbishment. Stricter lending rules mean many mortgage providers won-t pass a mortgage unless a property has a kitchen and bathroom. This has led to many experienced property developers and residential landlords being declined mortgages from high street lenders because properties are deemed as not habitable.

Short term finance expert, Chris Baguley, from Auction Finance Limited, reported:

"With a reported 710,000 empty properties in the UK* and a housing shortage of 250,000 per year**, it is essential property developers gain access to finance needed to develop the UK's depleted housing stock.

"There is a significant percentage of the UK housing stock which is in need of renovation. For example, old properties which were once large homes could be converted into flats offering strong rental yields for property developers; however banks won't lend on them because they don't yet have a functioning kitchen or bathroom".

"This means many properties which, with suitable improvements, could provide much needed housing are being left derelict because many investors are unaware of alternative funding."

Auction Finance Limited has been combatting this obstacle by providing buy-to-let investors, purchasing at property auctions, a bridging loan to secure the property while a bathroom and kitchen is fitted and long term finance is secured.