Typical LTV on a tenanted warehouse, and how the lease term moves it.
A company buying a tenanted warehouse can expect 65% to 75% loan to value in 2026, priced from about 6% a year. The unexpired lease term is the variable that moves both: with five or more years left and a sound tenant, the top of the range; under three years, lenders cut LTV by 5% to 10%, price 0.5% to 1% higher, and may size on vacant possession value rather than investment value.
By Dominic Whitecross, Co-Founder, HyLend. Last reviewed October 2026.
LTV and pricing by unexpired lease term
| Unexpired term | LTV | Rate, 2026 | Basis and notes |
|---|---|---|---|
| 10+ years, strong covenant | 70% to 75% | From 6.0% | Investment value; some lenders 75% plus on institutional tenants |
| 5 to 10 years | 70% to 75% | 6.0% to 6.75% | Investment value; break clauses treated as expiry by most lenders |
| 3 to 5 years | 65% to 70% | 6.5% to 7.25% | Investment value, but exit tested on re letting |
| Under 3 years | 60% to 65% | 7% to 8% | Often vacant possession value; shorter loan term or cash sweep |
| Vacant | 55% to 65% | 7.5% to 9% | VP value; owner occupier or bridge to let more likely |
Indicative, company borrower, standard warehouse in a secondary or better location. Prime logistics and multi let estates price lower. Industrial and warehouse mortgages →
Why the lease term matters so much
A commercial lender is lending against the income as much as the building. Investment value is the capitalised rent; vacant possession value is what the empty shed would sell for, often 15% to 30% lower on secondary stock. If the lease will expire inside the loan term, the lender has to assume it might not be renewed, so it either sizes on the lower value, shortens the loan to end before the lease does, or requires a cash sweep or capital repayment that reduces the balance by expiry.
Break clauses count as expiry for most lenders. A ten year lease with a tenant break at year five is underwritten as a five year lease unless the break is conditional and the tenant's position makes it unlikely.
The tenant, and what lenders check
Covenant strength is read from filed accounts: turnover, profitability, net assets, and whether the rent is a small share of the tenant's costs. A national occupier or a well capitalised regional business supports the top of the range; a young company with one year of accounts sits lower, whatever the lease says. Lenders also look at rent against market: an over rented unit is valued on the lower market rent for the period after expiry.
Structuring a purchase with a short lease
Three routes work. Agree a lease extension or re gear with the tenant before completion, which lifts both the value and the LTV; many tenants will trade a longer term for a rent free period or a break. Take a shorter loan or a bridge to term structure that refinances once a new lease is signed. Or accept a lower LTV and price in the re letting risk, which suits a buyer who wants vacant possession at expiry anyway. Bridge to term structures →
How we place it
We size the case on both values, investment and vacant possession, and show which lenders will lend on which basis at this lease length. The difference on a £2m unit with four years unexpired is routinely £200,000 to £300,000 of loan.
Send the basics
Asset, amount, timeline and exit. Lender backed indicative terms within 24 hours, tested across the whole market rather than a single panel.
Send the basics → or call 07310 008347, or WhatsApp +44 7741 434395.
Warehouse LTV and lease term: FAQs
What LTV can I get on a tenanted industrial unit?
65% to 75% in 2026 for a company borrower with a sound tenant and five or more years unexpired. Shorter leases and weaker covenants reduce it by 5% to 15%.
Does a short lease stop me getting a commercial mortgage?
No, but it changes the loan. Under three years unexpired most lenders size on vacant possession value, lend 60% to 65%, price higher and may shorten the term or require capital repayments.
How do lenders treat a tenant break clause?
As the lease expiry in most cases. A ten year lease with a five year break is underwritten as five years unless the break is conditional and unlikely to be exercised.
What is the difference between investment value and vacant possession value?
Investment value capitalises the rent under the lease; vacant possession value is the empty building's sale price. On secondary industrial stock VP can be 15% to 30% lower, and lenders use it when the income is not secure for the loan term.
Can I buy a warehouse through a new company?
Yes, through an SPV with personal guarantees from the directors. Lenders look through to the directors' experience and net worth and to the tenant's covenant.