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Release: Self-employed workers excluded from UK mortgage market

01-Oct-2014

New research shows 3.5 million of those who have ever been self-employed have been refused mortgages

Almost a quarter of UK adults who have been self-employed for more than 12 months have been turned down for a mortgage, according to new research1 from Kensington, the specialist lender. Despite almost 30% of the UK population or 15.0 million adults having been self-employed for more than a 12 month period at some point in their life, a staggering 24% of those have been refused a mortgage, including 10% who were completely unable to secure a mortgage from any provider.

The research also reveals that men (37%) are more likely than women (22%) to be self-employed at some point in their lives, with those in Scotland, London and Eastern England being more likely to seek this form of employment (see figure 1).

Figure 1.

Source: Kensington Mortgages, September 2014

Figure 1.
East Midlands 32%
Eastern England
33%
London
32%
North East
26%
North West
24%
Northern Ireland
20%
Scotland
35%
South East
31%
South West
31%
Wales
32%
West Midlands
25%
Yorkshire / Humberside
25%

According to recent figures, 4.6 million people are currently self-employed in the UK, accounting for 15% of the country’s workforce. This is the highest proportion than at any point since official employment records began.2

According to analysis by Kensington, if such trends continue, by 2054, the self-employed will make up almost a third of the UK’s workforce (30%).3

Yet despite this growing trend, Kensington’s research reveals that the ability to secure a personal residential mortgage was a concern for 11% of people when they were self-employed, particularly those in the West Midlands (25%).

Overall, the greatest concerns for over three in ten self-employed people were the challenge of finding new business, securing funding or finance / cash flow and where the next work or project will come from (see figure 2 & 3).

Figure 2. Greatest concerns for the self-employed (multi-answer):

Source: What are/were your greatest concerns as a self-employed individual? Please select all that apply.
Kensington Mortgages, September 2014

Figure 2.
Finding new business/clients
37%
Funding and financing, including managing regular cash flow
36%
Where the next work / project will come from 35%
Managing a healthy work/life balance 30%
Filling in tax returns or other mandatory government forms 27%
Not being able to take holidays when you want to 19%
Finding reliable suppliers 16%
Feeling isolated, out of touch with the rest of the industry 13%
Ability to secure a personal residential mortgage 11%

Keith Street, Head of Kensington, says:

“It’s very clear from our research that not only are the self-employed the fastest growing part of the UK workforce, but that the prospect of being refused a mortgage is a real threat and understandable concern for them.

“At Kensington we have the underwriting expertise to make individual lending decisions for people whose circumstances are not easily assessed by a tick-box automated approach. We believe that self-employed workers can benefit from this approach and the guidance offered by a professional mortgage adviser.

“Our message is clear – if you are self-employed, your mortgage options are not limited to the high street. Speak to an independent adviser to find the most appropriate mortgage for your circumstances.”

Figure 3. Greatest concerns for the self-employed by region (multi-answer):

Kensington Mortgages, September 2014
*Caution : Small base size (n<30) – directional use only.

Figure 3.
East Midlands Managing a healthy work / life balance 35%
Eastern England Finding new business / clients 39%
London Finding new business / clients 47%
North East* Funding and financing, including managing regular cash flow 49%
North West Finding new business / clients 40%
Scotland Where the next work / project will come from 37%
South East Where the next work / project will come from 41%
South West

Managing a healthy work/life balance

Funding and financing, including managing regular cash flow

42%

42%

Wales* Funding and financing, including managing regular cash flow 41%
West Midlands Finding new business / clients 38%
Yorkshire / Humberside Funding and financing, including managing regular cash flow 50%

Since 2009 Kensington has introduced a series of developments to its products, processes and communication platforms to enhance its offering.

The lender is committed to offering via mortgage intermediaries a range of simple Residential and Buy-to-Let mortgages for borrowers with specialist requirements.

Self-employed Mortgages

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