With the rising costs of living and ever-increasing property prices, studio flats continue to remain a popular choice for buyers and make a great step onto the property ladder or a great investment for investors. However, studio flats do pose some challenges when it comes to getting a mortgage with some lenders.

What is a studio flat?

A studio flat is a self-contained living space that typically consists of a single room that serves as a bedroom, living room, and kitchen all in one. The bathroom is usually separate. Studio flats are typically smaller in size than traditional one-bedroom apartments and are often more affordable as a result. They are popular with young professionals, students, and first-time buyers who are looking for affordable living arrangements.

Can you get a mortgage on a studio flat?

Yes, it’s possible to get a mortgage on a studio flat, but not with all lenders. Some lenders have restrictions on the minimum size of studio flats they will lend on due to issues of resale or perceived risk. Some lenders may also choose not to lend on studio flats at all, while others may require a higher deposit or interest rate.

Key factors when getting a mortgage on a studio flat

Here are the key factors that lenders may consider when assessing a mortgage for a studio flat:

  • Size: Some lenders may have a minimum size requirement for studio flats. This is because smaller units may be harder to sell or rent out in the future and may therefore pose a higher risk for the lender. The minimum size requirement for studio flats can vary between lenders, but it’s typically around 30 square meters or more.
  • Configuration: Some lenders may prefer a separate kitchen and bathroom rather than an open-plan design. This is because open-plan designs may be perceived as less private or less functional, and may therefore affect the resale value of the property. Additionally, self-contained units with their own separate entrance may be more attractive to lenders as they offer more privacy and security.
  • Location: The location of the studio flat is also an important factor for lenders. Studio flats located above commercial properties or in high-rise buildings may be perceived as higher risk by some lenders due to noise levels, lack of natural light, or concerns about resale value. Similarly, studio flats in ex-local authority blocks may be considered higher risk due to their potential for depreciation. Lenders may require a higher deposit or interest rate for studio flats located in these areas.
  • Valuation: The property valuation is important as it determines the amount of mortgage a lender is willing to offer. The valuation may be affected by factors such as the location, condition, and demand for studio flats in the area. If the studio flat is located in an area with low demand or has poor condition, the valuation may be lower, which may affect the mortgage amount offered by the lender.
  • Property use: For studio flats, residential mortgages are more common than buy-to-let mortgages, particularly for smaller studio flats.

Which lenders consider studio flats less than 30 square meters?

Some mortgage lenders may consider mortgages on properties smaller than 30 square meters, such as studio flats. However, lenders typically assess such properties on a case-by-case basis and may have certain conditions or restrictions in place.

Halifax and Nationwide are two prominent lenders in the UK, and it’s possible that they have specific policies regarding studio flats smaller than 30 square meters.

Which lenders lend on studio flats less than 30 meters squared for buy-to-let?

Only a small percentage of buy-to-let lenders offer mortgages on studio flats smaller than 30 square meters, and such properties will always be subject to valuers’ comments. BM Solutions is one mainstream lender that considers these properties, and Santander, along with other specialist lenders, may also have options available.

Other considerations when buying a flat

When buying a flat, there are several important considerations to keep in mind. Here are a few key factors:

  • Lease: Check the length of the lease on the property. A shorter lease may affect the property’s value and your ability to secure financing. Consider the remaining lease term and any potential costs associated with extending the lease in the future.
  • Ground Rents: Verify the terms of the ground rent, as some leases include escalating ground rents over time. High ground rents can impact the affordability of the property and may affect its marketability when you decide to sell.
  • Service Charges Understand the service charges associated with the property. These charges cover the maintenance and management of communal areas and shared facilities. Review the service charge history, any planned increases, and the overall financial health of the building’s management company.
  • Above Commercial/Shops: If the flat is located above commercial premises or shops, consider the potential impact on noise levels, access, and general liveability. Some lenders may have restrictions on providing mortgages for properties located above commercial premises.
  • Legal and Financial Advice: It’s crucial to seek professional advice from a solicitor or conveyancer who specialises in property transactions. They can review the lease, advise on any potential risks or issues, and ensure you have a comprehensive understanding of your legal obligations and rights.
  • Building Management: Assess the quality of the building’s management, including the responsiveness to maintenance issues, the condition of communal areas, and any planned or ongoing renovations. This can significantly impact your experience as a resident and the long-term value of the property.