Penrith Building Society has become the latest mortgage lender to revise its official requirements regarding the minimum unexpired lease term acceptable for leasehold properties offered as security.
The update to the lender’s Building Societies Association (BSA) mortgage instructions came into effect recently, raising the minimum unexpired lease length requirement from 70 years to 85 years at the time of completion. So that would appear as though the lender is saying that 85 years remaining is regarded as a short lease.
This revision reflects a broader industry trend among mortgage providers tightening their underwriting criteria for leasehold transactions:
-
Part of a Broader Shift defining what is now regarded as a short lease: Penrith Building Society is the 20th lender to adjust its minimum unexpired lease term requirements during 2015.
-
85-Year Benchmark: Of these 20 lenders, nine increased their minimum threshold specifically to 85 years.
-
Significant Tightening Since 2008: The extent of this shift is particularly clear when comparing current rules to historical criteria—four of those nine lenders were willing to accept leases with as few as 55 years remaining back in 2008.
For legal practitioners and conveyancing solicitors on the Penrith Building Society panel, ensuring early verification of unexpired lease terms against the lender’s BSA instructions is essential to prevent delays or potential mortgage rejections during leasehold purchases or remortgages.
Resolving Short Lease Issues Today
When a lender raises its unexpired lease threshold, properties that were previously mortgageable can suddenly face transaction bottlenecks upon resale or remortgage. If an unexpired lease term drops below a lender’s required minimum, sellers are often required to arrange a statutory or informal lease extension before the mortgage funds can be released.
If you are dealing with lender queries or delays caused by an unexpired term, read the comprehensive guide on short lease issues and lease extensions when selling or remortgaging to understand your legal options and how original transaction records can impact your path forward.
Leave a Reply