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Lender's decision heightens necessity for Lease Extensions

Over the last few months I have written various articles about how now is the best financial time to extend your lease.   These comments are based on advising tenants that they should take a lease extension now if they have opportunity. Recent mortgage lender activity  seems to dictate that lease extensions have become a matter of necessity.  

In the last few days  Cheltenham & Gloucester changed their lending terms from being prepared to lend on leases with 60 years remaining to only now being prepared to lend on leases with a 70 year minimum.   A number of banks over the last six months have changed the lending requirements on the minimum number of years remaining under the lease but a 10 year change is significant.

This will clearly impact on the hundreds of thousands of properties throughout the UK where the residential lease has less than 70 years remaining.   To put this in perspective, if you have a lease with 68 years remaining and are seeking to remortgage with Cheltenham & Gloucester then the chances are that they would withdraw the offer once the conveyancing lawyer reveals the number of years remaining.

It is not just remortgages that need to be considered.   The action by Cheltenham & Gloucester  – and it is not unreasonable to assume that other lenders will follow suit – will also affect the housing market in that the change in lenders’ requirements will have a knock-on effect in terms of buyers’ attitude as well as the advice given by prospective purchasers’ solicitors.

It is also worth bearing in mind that even if you have a share of freehold, the lender’s requirements concerning the number of years remaining will still apply.   Therefore, you will still need a lease extension in a share of freehold situation.   For further information please contact our lease extension team who cover lease extension conveyancing in London as well as throughout the England and Wales.

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