I am buying a flat which has 87 years left on the Lease. Is this acceptable or would I be safer if the Lease was longer?
Lease terms can vary substantially. Up until 10-15 years ago long residential leases were generally granted on a 99-year term. However, the increased demand for mortgages and the introduction of mortgage products for longer terms has brought pressure to bear on this length of term.
The problem is their acceptability to Lenders. The general principle is that the Lender will require a term of years left to run on the Lease of at least 30 years beyond the term of the mortgage. With a 30-year mortgage term this results in a minimum term remaining of 60 years.
However, some mortgage products are now granted over even longer periods of say 35-40 years to make them affordable to borrowers. In such cases you will see that a minimum Lease term requirement could be anything up to 70 years.
With a 99-year Lease this problem arises relatively early during the lease term, and the majority of existing long leases have less than this period to run in any event – resulting in the need for an extension of the Lease term from your landlord.
A term of 87 years remaining on your lease is, therefore, more than adequate as this will give you a minimum of 17 years before it becomes an issue with Lenders for mortgage purposes.