Thousands of homes 'unsellable' unless owners agree to pay £6,000

James Rodger

25 September 2024 at 3:05 pm·2-min read

Thousands of homes 'unsellable' unless owners agree to pay £6,000 — -Credit: (Image: Reach Publishing Services Limited)

Thousands of homes are unsellable - with owners needing to fork out up to £6,000 to protect themselves, it has been warned. Thousands of UK households have been warned their homes are on the cusp of being "unsellable".

Banks require a certain number of years on a lease - with 85-year terms for Nationwide, Virgin and Leeds Building Society, while Santander and NatWest have 30-year minimumns. There is a 70-year requirement for Barclays and TSB customers as well as those borrowing from Halifax and Lloyds.

Properties with leases of less than 120 years are looking unattractive to buyers, experts have warned. There are around 370,000 homes with leases of under 80 years, according to HomeOwners Alliance - meaning thousands are at risk.

Peter Gettins, a product manager at L&C Mortgages, said it's credible to that lenders will begin to increase the 85-year minimum remaining term needed for them to agree to offer loans. "The remaining lease is certainly a factor for lenders and policy can vary widely, but many will require a remaining lease of around 80-85 years when taking the mortgage out, and to have 45-50 years remaining at the end of the mortgage term," he said.

Andrew Boast, property expert at SAM Conveyancing, explained: "The recent shift in attitudes towards leasehold lengths, with leases below 120 years now seen as less attractive, is likely due to a combination of factors. This includes longer-term mortgages, buyer caution around the cost, risk and complexity of extending a lease, and growing pressure for leasehold reform."

He added: "Overall, we’re seeing more buyers hesitant to take on a property where a lease extension may be required soon after purchase, especially with the costs and complexities involved. The fear is not just about the immediate expense associated with an extension but also about marketability down the line - especially in light of how much the property market has fluctuated in recent years.

"If the lease is seen as a liability, selling it later could be more challenging, leading to a situation where a minimum 120-year leasehold is becoming the new norm." Sarah Gillbe, senior consultant legal executive at Setfords, said: "For every year off the term of the lease, the extension will be more expensive as the landlord’s interest is greater and the leaseholder’s has diminished.

"Because of the speed of reduction in value on a shorter lease, lenders are usually only confident on lending on leases with plenty of time left so that the asset remains valuable to them."

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