There is a broad spectrum of opinion between CML lenders in England & Wales as to the minimum length of an acceptable residential lease for a full term mortgage of 25 years according to a survey carried out by Law Workshop.
The median minimum length of lease is 60 years left at the commencement of the mortgage term. 59% of lenders will accept a lease with at least 60 years left although 41% of lenders require a longer term for security. The shortest acceptable lease is 25 years plus the mortgage term from lenders including Barclays, Beverley Building Society and Clydesdale Bank.
The longest minimum term is required by Allied Irish Bank. 70 years at the end of the term, that’s 95 from commencement of a mortgage term of 25 years!. "This survey is a reminder that conveyancers must appreciate the variations in lender requirements in their respective Part 2 of the Handbook and don’t assume that all lenders are the same" according to Law Workshop’s Peter Watkin.
The variations are illustrated by the approach taken by the four High Street banks, HSBC, Barclays, Lloyds and Nat West. HSBC, of course do not adopt the CML Handbook, Barclays will accept a minimum of mortgage term plus 25 years whereas Nat West Home Loans want another 5 years on the mortgage term but Lloyds TSB Bank PLC require an overall minimum unexpired lease term of 70 years.
The wide differences between lenders on the length of term is matched by widely varying wording and qualifications. Among the 100 lenders surveyed there were more than 40 different wordings for the answer to CML Handbook part 2 question: 5.13.1. "What minimum unexpired lease term does the lender accept?"
A handy listing of acceptable minimum terms is available from www.law-workshop.co.uk
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