Lease length ratings - FAQs

What is the change?

• Properties will no longer be assessed by type (standard/flat) but by tenure - leasehold or freehold. Freehold properties will have no loan to value (LTV) adjustment applicable and leasehold properties will have an LTV adjustment based on a tiered approach (subject to a minimum requirement).
• Our minimum property lease length is now 75 years.
• Please see our technical guide for further details.

Why do you apply a property value adjustment on your LTV for leasehold properties? 

• The changes mean that customers with longer remaining leases could benefit from higher LTVs. This applies to all leasehold properties, flats and houses. Properties with shorter remaining lease terms will have the LTV adjusted as these can be more difficult to sell or remortgage.

• By moving to a tiered approach, we are giving leasehold home owners with longer lease lengths the opportunity to borrow more against their property.

• All Leasehold properties that meet our lending criteria. 

• We have introduced a new minimum remaining lease length of 75 years.  As lease lengths become shorter properties are more difficult to value and the property value will begin to drop.

Will the interest rates you charge be impacted by this change?

• Interest rates offered are not impacted by this change.

When will the changes apply from? 

• The changes will apply from 18 July 2022.

What are the transitional arrangements for pipeline business (quote, applications, offers and re-offers)?

• From 18 July 2022 all new quotes will take into account the new property value adjustments all for leasehold properties.
• We will continue to accept pipeline applications for flats / maisonettes on the current basis for 10 working days up to  29 July 2022.
• Any re-offers issued on or after 18 July will be on the new property value adjustment scale.

What happens if the lease information provided is incorrect?

• It is important that accurate remaining lease lengths are stated. Incorrect terms could result in terms changing at application stage when checked by our Solicitors or Administration Team as part of the conveyancing process close to completion.

Does this apply to additional borrowing?

• The changes will apply to all new initial and additional borrowing, as well as for customers applying to port their mortgage. The changes mean that customers with longer remaining leases could benefit from higher lending. This applies to all leasehold properties, flats and houses.

What should I do if a customer wants to take equity release to extend their lease length?

• If the reason to take out a Lifetime Mortgage is to extend the lease length then the anticipated lease length should be input, and extension of lease length stated on the application forms. These cases will proceed to offer with a special condition that the unexpired term of lease length matches what is stated on the application. We reserve the right to modify or withdraw the offer if the lease length differs.

Why do leasehold houses need to get a property value adjustment, when they haven’t before?

• As with flats and maisonettes, leasehold houses with short remaining lease lengths are more difficult to value and the property value will begin to drop.

How can I get an accurate remaining leasehold length?

• The customer's Solicitor / Estate Agent they worked with should be able to provide this information. Alternatively this information is available online. The simplest way is to visit the website of HM Land Registry, which oversees property registrations in England and Wales. Once on the website you can search for the customer's address and can pay to obtain the title register that will tell you how long remains on the lease, for an approximate cost of £3.