Non-Standard Construction: Financing Challenges & Opportunities

Non-standard construction is made from materials other than the typical bricks or stone. But how do you determine if the property you’re looking to buy is non-standard, and what problems will you face trying to finance it?

Non-standard Construction (NSC)

With one and a half million non-standard properties in the UK residential housing stock, not all properties look the same, nor are they built using the same standard construction method or materials. For those who want something different, whether building from the ground up or purchasing a listed property, financing any other property than a typical red-brick walled and tiled roof poses challenges, and spoiler alert: high-street mortgage lenders often aren’t the answer.

Whether you're a property investor, developer, homeowner, buyer, seller, or curious about non-standard construction, this article will cover what non-standard construction is, whether they are a worthwhile investment and the likely issues you’ll face when investing in it. 

What does Non-Standard Construction mean?

"Non-standard construction" (NSC), also known as non-traditional construction, is an umbrella term for properties built using unconventional or non-traditional materials or methods. It refers to anything other than a brick-and-mortar or stone dwelling with a slate or tiled roof.

The term was coined by the construction and insurance industries, allowing them to easily classify properties that pose risks due to their unique construction. While the term only refers to residential property, it covers many property types—from timber dwellings to luxury modern architectural homes.

What is Standard Construction? 

Contemporary “standard construction” uses brick, stone, slate, and tile (BSST) construction.

This type of construction is commonly used for residential. The materials used in standard construction are developed for their durability, fire resistance, and weatherproof properties. Strict technical guidance on material properties, building design, and installation are now commonplace when adhering to building regulations. Companies providing insurance & warranty, like the NHBC, have developed even more strict compliance and monitoring systems to define standard construction and ensure its implementation meets quality and safety thresholds. Standard construction properties are easier and less costly to finance and insure. 

What are the types of Non-Standard Construction?

Non-standard construction properties include cob houses, prefab, concrete wall high-rise blocks, modernist and brutalist homes, to name a few.

Let’s take a look at the main categories.

Pre-War Non-Standard Construction

Before World War II, non-standard materials and methods included timber frames, cob, thatch roofs, timber cladding, and wattle and daub. Some of these building methods have been used for over 10,000 years. 

Pre-war era properties are considered non-standard due to their unique construction methods and materials, which differ significantly from modern building practices. Unlike contemporary properties built with uniform, regulated materials and techniques, pre-war constructions often used locally sourced materials and traditional methods that are now less common. For example, this type of construction predominantly featured solid walls. These walls typically had a minimum thickness of a single brick and were arranged in a Flemish bond pattern using lime mortar. The buildings often incorporated timber sash windows and traditional cut roofs with slate tiles.

What are the financing challenges?

Properties constructed using pre-war non-standard methods typically face financing issues due to their perceived higher risk and potential maintenance demands. Lenders frequently offer fewer mortgage options for these properties. When mortgages are available, they often carry higher interest rates to mitigate structural and long-term viability risks. 

Post-War Non-Standard Construction

During the 1900s, housing shortages, post-war reconstruction efforts, government policies promoting social housing, technological advancements, architectural experimentation, and economic factors collectively accelerated the adoption of non-standard construction methods—around 500 different systems were listed between 1919 and 19761. As construction methods continued to evolve, solid wall construction was typical until the early 20th century, after which cavity walls became the preferred method and are still used today for standard dwellings and any NHBC-backed home. 

Post-war residential properties are typically priced 30-50% lower than traditional brick homes in the same area, reflecting challenges with their financing and limited mortgage lenders willing to lend against them.

What are the financing challenges?

Post-First World War non-standard construction properties are often priced at a lower market value than standard BSST construction homes, primarily due to mortgage accessibility. Lenders consider these properties riskier investments due to potential structural issues (non-standard construction). Higher insurance premiums and maintenance expenses discourage lenders and impact the property's long-term financial feasibility.

Modern Architecturally Inspired Designs

Pioneering architects have pushed the boundaries of non-standard construction methods since the 1920s, when the Bauerhaus movement was born. German architect Walter Gropius (1883–1969) and founder of the Bauerhaus championed a geometric, abstract style that reimagines the world in which we live, and it continues to influence architects, designers, and artists today. Mass experimental architecture emerged, replacing traditional stone, brick, and wood with steel, concrete, and glass.

Inspired by modernist principles and the Bauhaus school, it featured open interiors and focused on the idea that form must follow function. The most simplistic example of modernism in architecture is the shift from traditional pitched roofs to flat roofs. While pitched roofs offer many advantages, such as regulating temperature and efficient, reliable drainage, they are heavier on the wall and foundations, more difficult to maintain and create awkward spaces within the building. Flat roofs, conversely, can be lightweight, easily maintainable, maximise interior space, and are aesthetically simple in design. Any roof design incorporating over 25% as a flat roof is considered non-standard.

What are the financing challenges?

Lenders require specialised assessments to ensure durability and compliance with the Building Regulations 2010. Resale value uncertainties can influence mortgage terms and lender confidence, impacting financing options. These properties will likely be geared towards cash buyers, which limits the number of potential buyers.

Source: 1. Non-traditional housing in the UK - A brief review, BRE 2002

Converting and building a Non-Standard Construction property

There are two likely circumstances when considering non-standard properties and financing: you will likely be looking to convert an existing property to standard or build a non-standard one. 

Converting a Non-Standard Construction property

There are only a few instances when converting a non-standard construction property into a standard construction property would make financial sense. For example, a brick house with a flat roof could be converted to standard construction by replacing the roof with slate or tiles, but If the home has an irreplaceable steel frame, it will always remain non-standard. Similarly, adding a single-skin brick wall to improve insulation does not automatically qualify the property as standard construction. Therefore, the decision to convert should be carefully evaluated, considering the property's condition, potential costs, benefits, and long-term implications. It's up to you to weigh the pros and cons and decide based on your circumstances.

What are the typical costs of converting a Non-Standard Construction house?

The top three costs of converting a non-standard construction house include the structural assessment, material, and labour. More details on the specific costs can be found below.  

  • Structural assessment. A RICS Level 3 Home Survey, also known as a Building Survey, averages £800, with prices ranging from £630 to £1,200. However, a metal-framed property cannot be assessed using an RICS standard home buyer survey; you may also need to arrange a more intrusive survey, which can cost £1,000s.
  • Architects. For a standard residential project, the expense for architects to prepare planning application drawings begins at £5,000 for extensions, £7,000 for minor conversions, and £10,000 for small new builds. Architects can charge you a percentage of the project costs, ranging from 1.5% to 20%.
  • Planning permission. The current fee for a full planning application to build a new house or carry out a conversion in England is £624. This fee covers the cost of processing the application, which includes evaluating the proposed design and its compliance with local planning regulations. The planning authority reviews various aspects, such as the impact on the surrounding environment and adherence to building regulations.
  • Labour costs. Hiring skilled contractors and tradespeople to perform the conversion work represents a significant expense, costing between £112 and £360 per day. This includes carpentry, roofing, plumbing, and electrical work. Labour costs fluctuate based on the non-standard construction type and the associated works.
  • Material costs. Purchasing materials such as roofing, insulation, cladding, and reinforcement constitutes a substantial portion of the conversion expenses, with costs varying based on the required quality and quantity of materials.
  • Waste costs. Waste disposal costs vary based on the weight and type of material. Generally, manual clearance ranges from £64 to £94 per hour, while an 18-yard skip costs around £300.

While these are the main costs, each non-standard construction will have varying costs depending on the type of construction. For example, modern architecturally designed buildings will likely have fewer conversion costs than pre-war construction. 

How can I finance a Non-Standard Construction Property?

Securing financing for non-standard construction properties can be tricky. Many properties have unique features that don't fit traditional lending criteria, with high-street lenders unlikely to take the risk.

These properties often require specialised loans, like specialist mortgages or bridging loans, tailored for properties outside conventional construction methods.

Can I get Bridging Finance for a Non-Standard Construction property? 

Yes, you can get bridging finance for a non-standard construction property. A bridging finance facility will provide a short-term financing solution, bridging the gap until long-term financing becomes available or the loan is repaid. This type of funding is typically arranged within 3-14 days, making it ideal for purchasing from auction houses or when quick completion is necessary. 

Bridging finance offers flexibility in repayment schedules and interest rates. One significant advantage it provides investors interested in non-standard properties is its valuation method. Bridging lenders assess the property's value based on open market value rather than the purchase price, thereby reducing the required upfront deposit.

Is it more difficult to obtain a Non-Standard Construction mortgage for a property?

Non-standard construction mortgages are available unless the property is classified as "defective", in which case it is unmortgageable via traditional lenders. If you’re trying to “buy an unmortgageable property” using a mortgage, you may need to accept less favourable mortgage terms, such as a higher deposit or interest rate.

Is Equity Release possible on a Non-Standard Construction property?

Equity release requires you to have equity available in your property that meets the LTV of a lender. You can find a lender offering finance on your non-standard construction type, but it's likely to be more complicated. Lenders view it as riskier, making the process harder but not impossible—in most cases, you will need to use a specialist.

Final thoughts

Properties of non-standard construction, built using unconventional materials or methods, present unique financing challenges and offer opportunities for those seeking alternative property investments.

While traditional high-street mortgage lenders may shy away from these properties, alternative financing options like specialist mortgages or bridging loans can provide viable funding for purchasing, renovation, conversion or building. Understanding the nuances of non-standard construction and its impact on financing is crucial for navigating these challenges effectively.

Amidst the housing crisis and the UK government's pledge to deliver 300,000 homes a year, non-standard construction could gain traction amongst investors as a viable solution to housing demands.


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