Octane Capital has reported a 17.1% decline in the number of unmodernised properties available across England, highlighting the growing importance of specialist lending.
Analysis of current listings revealed that stock has fallen from 36,175 properties last year to 29,981, with every region recording a reduction.
The West Midlands saw the largest decline at 24.9%, followed by the North West at 24.1% and Yorkshire and the Humber at 21.6%.
Despite the overall fall in supply, the South West accounted for the largest share of remaining stock at 17.2%, followed by the South East at 16.6% and the East of England at 14.3%.
Octane Capital said unmodernised properties continue to offer value-add opportunities for investors, typically involving refurbishment, conversion or extension to increase value before refinancing or sale.
However, many of these properties are not suitable for mainstream mortgage finance due to condition issues such as structural defects, outdated interiors or low EPC ratings.
The lender said this is increasing reliance on bridging and refurbishment finance, particularly in competitive scenarios such as auctions or acquisitions involving derelict stock, where speed and flexibility are critical.
Jonathan Samuels, chief executive officer at Octane Capital, said: “Whilst the number of unmodernised properties coming to market has reduced, the appetite from investors certainly hasn’t and, with fewer opportunities available, competition for the remaining stock is only likely to intensify.
“These homes continue to offer significant value-add potential, whether through refurbishment, extension, conversion, or simply bringing them back up to modern standards.
“However, many are not suitable for mainstream mortgage finance in their current condition, which means investors need access to specialist funding in order to act quickly.
“Bridging and refurbishment finance play an increasingly important role here, allowing investors to secure opportunities as soon as they arise and fund the works required to unlock their full value.”
