Does a short lease matter?

Certain things in life are inevitable – death, taxes and the raw truth that day by day, your lease is getting shorter. But when you’re selling a flat, with a short lease, does the length of the lease term really matter?

Quite apart from the fact that if you don’t extend your lease then eventually it’s going to expire and you will no longer own that flat, ending up with a short lease has some problematic consequences. That’s just 1 of the reasons why, if you’re looking at selling a flat with a short lease, extending your lease is so important

Got a lease extension question? Call our specialist solicitors on FREEPHONE 0800 1404544 for FREE initial phone advice – with no strings attached.

Selling a flat with a short lease – serious mortgage problems

Not least amongst the potential problems with a short lease is the fact that, increasingly, mortgage lenders are reluctant to lend on short leases. So, selling a flat with a short lease may prove difficult.

But don’t just take our word for it – at the bottom of the page you will see an extract from some recent figures on the Council of Mortgage Lenders website and the link to bang up-to-date information which shows that it’s become pretty difficult to obtain a mortgage on any residential property with a short lease.

And what do we mean by a short lease? There is no legal definition of a short lease and there is no doubt that in the last 10 years, mortgage companies have really moved the goalposts by requiring increasingly longer leases before they will consider a loan.

As you’ll see, many of the leading mortgage companies won’t even consider a mortgage on a lease with less than 70 years to run – so, and this is just a personal opinion, probably anything either below, or even approaching that crucial 70 year mark is a short lease and any property with that length of term remaining is going to be difficult to sell.

Selling a flat with a short lease – our expert advice

To make sure you get the best price for your property and to maximise the number of possible purchasers, you need to make sure either that;

1. you extend your lease well above the 70 year mark in advance of putting your property on the market OR

2. if you don’t have the cash to extend your lease extension, or you don’t want to wait for a leasehold extension to be completed,[and if you go down the safer formal route this could take up to six months or so] then you can start the process of lease extension yourself, by instructing a solicitor to issue the formal lease extension notice – and then transfer the right to extend the lease to the new purchaser. However, if you go down this second group, any sensible purchaser will look to reduce the price they going to pay you for your flat by the very least the likely cost of the lease extension, and probably a bit more on top.

NB although it’s not directly linked to selling your flat, please do be aware that the cost of lease extension goes up significantly when the remaining term of your lease dips just one single day below 80 years. So, regardless of whether you’re looking to sell your flat, if possible make sure you extend your lease well in advance of that 80 year period – we could end up paying thousands of pounds more for your lease extension. [Want to know why? Click here to find more about marriage value and your lease extension.]

How our specialist lease extension solicitors can help you.

Here at Bonallack & Bishop, our leasehold team have helped around 10,000 people like you with short lease problems – extending individual leases and helping other leaseholders to buy the freehold of their block.

With over 25 years experience our specialist 5 strong leasehold team is possibly the largest and most specialist team of its type in the country – and we handle up to 500 leasehold extension and enfranchisement cases every year for clients throughout England and Wales:

Now is the right time to extend your short lease

While a lease extension for your flat always makes good financial sense, now is a great time to extend your lease. Why?

The UK housing market has been quite buoyant for some time now, which industry experts think could last for a few years. That means that the price of property generally is likely to go up and that in turn means that the cost of extending your lease will increase. So why wait for the price to go up – extend your lease today.

What kind of conditions do mortgage companies insist on when lending on a lease extension?

This is another issue. Quite apart from the fact that an increasing number of lenders require increasingly long remaining lease terms, other lenders adding additional requirements. Here are just a couple of your case studies that we’ve dealt with recently

1.       Lender: Leeds Building Society      Existing Lease Term: 52 years

 The clients had owned the property since 1992 and jointly owned the freehold with the flat below since circa 2010. They hadn’t re-mortgaged for some years and when they applied to Leeds, one of the conditions was that the lease extension would take place first, or simultaneously with the re-mortgage.

2.       Lender: Coventry Building Society         Existing Lease Term: 69 years

The client had owned the property since 2001 and last re-mortgaged in 2006. She decided to pursue a statutory or formal lease extension claim in this case, but either way the lender required it to be extended for the re-mortgage.

In both of these cases the existing lease lengths were relatively low and of course many lenders have different requirements.

What minimum unexpired lease terms do mortgage lenders require?

The Council of Mortgage Lenders Handbook provides an up-to-date list of lending criteria for leasehold property for approximately 97% of  lenders in England and Wales– click here to view that list

And here is a summary of the lending criteria for some of the biggest lenders as at according to the Council of Mortgage Lenders as at 6/2/19

lease minimum unexpired lease term Accord Buy to Let 85 years from the date of completion of the mortgage. Please ensure that you explain the implications of a short term lease to the borrower. Accord Mortgages Ltd 85 years from the date of completion of the mortgage. Please ensure that you explain the implications of a short term lease to the borrower. Adam & Company At least 30 years (calculated from the date stipulated for the repayment of the loan) unless we advise you otherwise in writing. Adam & Company International At least 30 years (calculated from the date stipulated for the repayment of the loan) unless we advise you otherwise in writing. Ahli United Bank (UK) plc 20 years (at term end) Aldermore Bank PLC 60 years from the date of the mortgage, subject to 40 years remaining at the end of the mortgage term. However, where the lease is shorter than 85 years from the date of the mortgage and this is not detailed in the valuation report, you should notify us so that we can ensure that there is no adverse effect upon the valuation. Allied Irish Bank (GB), a trading name of AIB Group (UK) 60 years remaining at expiry of mortgage term. Atom Bank plc At least 80 years at the outset of the mortgage and at least 50 years remaining at the expiry of the mortgage term. Aviva Equity Release UK Ltd 160 years minus x Where x=the age of the youngest borrower Bank of Ireland (UK) plc Yes, subject to a minimum lease term of 85 years. The unexpired lease term must be at least the mortgage term plus 45 years. See also 5.14.9 Bank of Ireland as Bank of Ireland Mortgages Yes, subject to a minimum lease term of 85 years. The unexpired lease term must be at least the mortgage term plus 45 years. See also 5.14.9 Bank of Scotland Beginning A Minimum 70 years from the date of the mortgage. Bank of Scotland Beginning O Minimum 70 years from the date of mortgage. Banks and Clients Plc Refer to lender Barclays Bank UK PLC Mortgage term plus 25 years Barnsley Building Soc, a trading name Yorkshire Building Soc 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. Birmingham Midshires Minimum 70 years from the date of the mortgage. Bluestone Mortgages Mortgage term plus 30 years. Bradford & Bingley Plc The lease must have at least 25 years remaining at the end of the mortgage term. Britannia, a trading name of The Co-operative Bank plc 70 years unexpired at application, 30 years at the end of the mortgage term Buckinghamshire Building Society Minimum of 35 years unexpired at the end of the mortgage term Capital Home Loans Must have at least 60 years unexpired term on completion, with a minimum of 35 years remaining at the end of the mortgage term. Chelsea Building Society (a trading name of Yorkshire BS) 85 years from the date of completion of the mortgage. Please ensure that you explain the implications of a short term lease to the borrower. Clydesdale Bank plc Mortgage term plus 30 years. Co-operative Bank plc 70 years unexpired at application, 30 years at the end of the mortgage term Coutts At least 30 years (calculated from the date stipulated for the repayment of the loan) unless we advise you otherwise in writing. Coutts Finance Co At least 30 years (calculated from the date stipulated for the repayment of the mortgage) unless we advise you otherwise in writing. Coventry Building Society A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. Cynergy Bank Not less than 75 years at drawdown of the loan or first drawdown where the loan is drawn down in stages or less than 50 years unexpired at the end of the loan. Darlington Building Society Minimum of 85 Years DB UK Bank Ltd Mortgage Term plus 40 years Dudley Building Society Capital and Interest basis – 85 years at draw down Part and Part/Interest only & less than 50% – 85 years at draw down Part and Part/Interest only & greater than 50% LTV – 85 years remaining at the end of the term Earl Shilton Building Society Mortgage Term plus 50 years Ecology Building Society Mortgage term plus 35 years Family Building Soc (a trading name of National Counties BS) A minimum of 50 years must remain at the end of the mortgage term. Fleet Mortgages 75 years unexpired at the commencement of the mortgage term but the unexpired term of the lease should not be less than 40 years at the scheduled end of the mortgage period Foundation Home Loans 50 years unexpired at the end of the mortgage term. Furness Building Society Minimum 85 years unexpired from completion, subject to not less than 55 years remaining at the end of the mortgage term. GE Money Home Lending Ltd GE Money Home Lending has withdrawn from the UK mortgage market. Godiva Mortgages Ltd A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. Halifax Minimum 70 years from the date of the mortgage. Halifax Loans Ltd Minimum 70 years from the date of mortgage. Hampden & Co. plc At least 30 years (calculated from the date stipulated for the repayment of the loan) unless we advise you otherwise in writing. Handelsbanken Mortgage term plus 50 years. Harpenden Building Society Mortgage term plus 40 years Exceptions may be considered Hinckley and Rugby Building Society There must be at least 85 years remaining on the lease when the mortgage starts and a minimum of 50 clear and unrestricted years remaining on the lease after the end of the mortgage term Holmesdale Building Society 50 years remaining on the lease after the end of the mortgage term. HSBC Bank plc All Residential leasehold properties must have more than 30 years remaining on the lease beyond the term of the mortgage at the outset. All Buy to Let leasehold properties must have more than 35 years remaining on the lease beyond the term of the mortgage at the outset. HSBC UK Bank plc All Residential leasehold properties must have more than 30 years remaining on the lease beyond the term of the mortgage at the outset. All Buy to Let leasehold properties must have more than 35 years remaining on the lease beyond the term of the mortgage at the outset. Intelligent Finance Minimum 70 years from the date of the mortgage. Investec Bank plc 80 years after expiry of the mortgage. ITL Mortgages 70 years unexpired terms at completion. JPMorgan Chase Bank, N.A. 50 years unexpired at application, 30 years at the end of the mortgage term. Kensington Mortgage Company Ltd 85 years from the date of completion of the mortgage Kent Reliance (a trading name of OneSavings Bank plc) A minimum of 50 years must remain at the end of the mortgage term Keystone Property Finance 50 years unexpired at the end of the mortgage term Landbay 55 years unexpired at the end of the term Landmark Mortgages Limited The Mortgage Term plus 30 years. Leeds Building Society 85 years remaing from the start of the mortgage. Legal & General Home Finance Ltd Leasehold remaining term plus the age of the youngest borrower at completion must be at least 185 years. LendInvest Mortgage term plus 65 years Lloyds Bank plc pre fixed 20/40 Mortgage term plus 30 years subject to an overall minimum term of 70 years. Lloyds Bank plc pre fixed 50/30/77 Mortgage term plus 30 years subject to an overall minimum term of 70 years Lloyds TSB Scotland plc Mortgage term plus 30 years subject to an overall minimum term of 70 years M&S Bank All leasehold properties must have 30 years remaining on the lease beyond the term of the mortgage at the outset. Magellan Homeloans At least 55 Years at application and no less than 35 years at the end of the mortgage term. Manchester Building Society Mortgage Term plus 30 years. Market Harborough Building Society Mortgage term plus 50 years Masthaven Bank Mortgage term plus 75 years. Metro Bank plc For residential and buy to let transactions, at least 50 years at the end of the mortgage term. Molo Finance Buy to Let Mortgages A minimum unexpired lease term of 50 years must remain at the end of the mortgage term. Monmouthshire Building Society 80 years remaining on completion of the loan. Mortgage Agency Services 50 Year unexpired at application, 25 years at the end of the mortgage term Mortgage Express The lease must have at least 25 years remaining at the end of the mortgage term Mortgage Express No 2 National Counties Building Society A minimum of 50 years must remain at the end of the mortgage term. National Westminster Bank plc Mortgage term plus 30 years. For a Lifetime Mortgage, the term must be no less than 150 years minus the age of the Borrower. Nationwide Building Society Our minimum unexpired lease term is 55 years subject to at least 30 years remaining at the end of the mortgage term. Report to the issuing office if the lease term is shorter than that stated on the offer and has less than 100 years remaining. (There is no requirement to report if the lease term is lower than that stated on the offer but still has 100 years or more to run, or if the lease term is longer than that stated on the offer).NEW BUILD PROPERTIES (includes office conversions) The following are not acceptable: – The unexpired lease term is less than 125 years on a new build flat or 250 years on a new build house (does not apply to Shared Ownership) – Starting ground rent is more than 0.1% of the property value The lease must be amended to comply with the above. If not the case cannot proceed. Please advise us where the case cannot proceed. Ground rents and event fees: Ground rent and other event fees must be reasonable at all times during the lease term. For example, it is acceptable for ground rent escalation to be linked to RPI (Retail Price Index) or a similar index and where this is the case we do not need to be advised. However, unreasonable multipliers of ground rent will not be permitted, for example, doubling every 5, 10 or 15 years. These must be referred to us and we will advise if our mortgage offer remains valid. If you are unsure as to whether the terms of a lease are unreasonable, please refer the details to us. Nedbank Private Wealth Ltd We require am unexpired lease term of 75 years. New Street Mortgages 85 years from the date of completion of the mortgage NRAM Ltd The mortgage terms plus 25 years. Paragon Buy to Let Mortgages The unexpired term of the lease must have a minimum of 85 years at the commencement of the mortgage term and a minimum unexpired lease term of 65 years must remain at the end of the mortgage term. Paragon Residential Owner-Occupied Mortgages The unexpired term of the lease must have a minimum of 85 years at the commencement of the mortgage term and a minimum unexpired lease term of 65 years must remain at the end of the mortgage term. Paratus AMC Ltd 50 years unexpired at the end of the mortgage term. Parity Trust Mortgage term plus 35 years Pepper Money The lease must have a minimum unexpired term of 85 years at the time of application. Platform (a trading name of The Co-operative Bank p.l.c.) 70 years unexpired at application, 30 years at the end of the mortgage term, except where the mortgage application is pursuant to Platform’s participation in the Government’s Help to Buy Shared Equity scheme, in which case (a) the unexpired lease term must not be less than 250 years for new-build houses and not less than 125 years for new-build flats and (b) ground rent must be reasonable at all times and any escalation must be linked to RPI (Retail Price Index) or a similar index. Precise Mortgages (Charter Court Financial Services Ltd) 70 years unexpired on the lease at completion of the loan advance. Principality Building Society You should notify the Society where the unexpired term of the lease is 85 years or less. The Society’s lending policy is that it requires a minimum unexpired lease term of 85 years. Rooftop Mortgages Ltd Saffron Building Society There must be a minimum of 50 years unexpired lease remaining at the end of the mortgage term. Sainsbury’s Bank The unexpired term should be no less than 85 years at the commencement of the mortgage term. Santander UK plc Our minimum unexpired lease term is 55 years from completion, subject to at least 30 years remaining at the end of the mortgage term (an individual case instruction may provide for a shorter unexpired term). However, you must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. Santander UK plc for Alliance & Leicester mortgages only Our minimum unexpired lease term is 55 years from completion, subject to at least 30 years remaining at the end of the mortgage term (an individual case instruction may provide for a shorter unexpired term). However, you must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is providedWe will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. Scottish Building Society Unexpired term of lease must be at least 50 years at end of mortgage term. Scottish Widows Bank Minimum of 70 years unexpired at the start of the mortgage. Secure Trust Bank PLC 85 years from the date of the mortgage., Skipton Building Society 85 years from the date of completion of the mortgage St James Place Bank Minimum 70 years from the date of the mortgage. State Bank of India UK The unexpired term of the lease must have a minimum of 55 years at the commencement of the mortgage term and a minimum unexpired lease term of 30 years must remain at the end of the mortgage term. Swansea Building Society Mortgage Term plus 50 years Tesco Bank (a trading name of Tesco Personal Finance plc) Mortgage term plus 30 years (subject to a minimum unexpired term of 55 years). Please contact us as detailed in 1.11b should this not be the case. For new build properties, the following lease terms are not acceptable: – The unexpired lease term on a new build flat is less than 125 years – The unexpired lease term on a new build house is less than 250 years If the lease cannot be amended to comply with the above, the case cannot proceed. Please advise us immediately where the case cannot proceed. Contact point as detailed in 1.11b. The Mortgage Business Minimum 70 years from the date of the mortgage. The Mortgage Lender Limited For Residential (owner occupied) mortgages the unexpired term of the lease should not be less than 40 years at the scheduled end of the mortgage period. For Buy to Let mortgages the unexpired term of the lease should not be less than 50 years at the scheduled end of the mortgage period. The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term. Report to the issuing office if the lease term is shorter than that stated within the Offer and has less than 100 years remaining.(There is no requirement to report if the lease term is lower than that stated on the Offer but still has 100 years or more to run, or if the lease term is longer than that stated on the Offer). NEW BUILD PROPERTIES (includes office conversions) The following are not acceptable: – The unexpired lease term on a new build flat is less than 125 years – The unexpired lease term on a new build house is less than 250 years – Starting ground rent is more than 0.1% of the property value The lease must be amended to comply with the above. If not the case cannot proceed. Please advise us where the case cannot proceed. Ground rents and event fees: Ground rent and other event fees must be reasonable at all times during the lease term. For example, it is acceptable for ground rent escalation to be linked to RPI (Retail Price Index) or a similar index and where this is the case we do not need to be advised. However, unreasonable multipliers of ground rent will not be permitted, for example, doubling every 5, 10 or 15 years. These must be referred to us and we will advise if our mortgage offer remains valid. If you are unsure as to whether the terms of a lease are unreasonable, please refer the details to us. The Royal Bank of Scotland plc Mortgage term plus 30 years. For a Lifetime Mortgage, the term must be no less than 150 years minus the age of the Borrower. The Royal Bank of Scotland plc Direct Line Mortgages Mortgage term plus 30 years and sixty years remaining at drawdown. The Royal Bank of Scotland plc Direct Line One Mortgage term plus 30 years. The Royal Bank of Scotland plc First Active Mortgage term plus 30 years. The Royal Bank of Scotland plc Natwest one Account Mortgage term plus 30 years. The Royal Bank of Scotland plc One Account Mortgage term plus 30 years. The Royal Bank of Scotland plc Virgin One Mortgage term plus 30 years. The Tipton & Coseley Building Society Mortgage term plus 60 years with a minimum of 85 years outstanding at completion. Topaz Finance Ltd Mortgage term plus 35 years. TSB Bank plc Mortgage term plus 30 years subject to an overall minimum term of 70 years Ulster Bank Ltd Mortgage term plus 30 years. Vida Homeloans For capital and interest mortgages there should be 40 years of the lease remaining at the end of the mortgage term. For interest only or part interest only there should be 70 years of the lease remaining at the end of the mortgage term. Virgin Money plc 85 years at the time of completion. If it’s less, we require it to be extended on or before completion. Whistletree (a trading name of TSB Bank plc) The mortgage term plus 30 years Yorkshire Bank Home Loans Ltd Mortgage term plus 30 years. Yorkshire Building Society 85 years from the date of completion of the mortgage. Please ensure that you explain the implications of a short term lease to the borrower. Zephyr Mortgages For Zephyr: the requirement is for a minimum unexpired lease term of 70 years remaining at the end of the mortgage term. You must refer to Zephyr if onerous obligations are determined.

Extending your short lease – contact our specialists now

if you’re thinking about a UK lease extension, make sure you instruct a specialist solicitor to help you because the legal process involved is complex. Our lease extensions team concentrate on lease extension and enfranchisement only – so we have the specialist expertise you need. So, for FREE initial phone legal advice:

• Call our specialists now on FREEPHONE 0800 1404544 or

• Send us an email via the contact form below.