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Top reasons for Arnside lease extension


Main reasons to start your Arnside lease extension today:

Increase your lease and increase your Arnside property value

As the the remaining lease term of a Arnside domestic lease decreases so does its value and therefore the value of your property. Where the lease has, more than 125 years to run then this decrease may be negligible that being said there will become a point in time when a lease has under than eighty years left as part of the premium you will incur is what is known as a marriage value. This could be significant. It is the primary rational as to why you should consider extending sooner than later. The majority of flat owners in Arnside will meet the qualifying criteria; nevertheless a conveyancing solicitor can advise if you are eligible for a lease extension. In certain situations you may not qualify, the most frequent reason being that you have not been the owner of the property for two years.

Arnside property with a lease extension is almost the same value as a freehold

Leasehold residencies in Arnside with in excess of one hundred years unexpired on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and service charges justify it.

Banks and Building Societies may not loan monies on a short lease

Whether or not the lease is be regarded as a short lease depends on the specific mortgage company, yet lending institutions start to get nervous at around 75 years. This will be problematic once you come to sell or remortgage your flat as it will be effectively unmortgageable. Even though you may not have an imminent desire to sell but when you do your buyer must hold off for two years before being able to exercise the right to a a lease extension.

Lender Requirement
Bank of Scotland Minimum 70 years from the date of the mortgage.
Barclays plc Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below).

Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office.

Leases with fewer than 70 years should only be referred to the issuing office where the following scenario applies, as discretion may be applied subject to bank approval:

• Property is located in any of the following prestigious developments: Cadogan, Crown, Grosvenor, Howard de Walden, Portman or Wellcome Trust Estates in Central London AND
• The value of the property subject to the short remaining term is £500,000 or more AND
• The loan to value does not exceed 90% for purchases, 90% like for like re-mortgages, 80% for re-mortgages with any element of capital raising and 80% for existing Barclays mortgage borrowers applying for additional borrowing;
Lloyds TSB Scotland Minimum 70 years from the date of the mortgage.
National Westminster Bank Mortgage term plus 30 years.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges

For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years

LEASE EXTENSIONS

We require all lease extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to the Issuing Office

Why use us for your lease extension in Arnside?

The lawyers that we work with handle Arnside lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The conveyancer we work with provide it.

Arnside Lease Extension Case Summaries:

Jonathan, Arnside, Cumbria

In recent months Jonathan, came seriously near to the eighty-year mark with the lease on his ground floor flat in Arnside. Having bought his property two decades ago, the length of the lease was of little concern. Luckily, he recognised he needed to take action soon on a lease extension. Jonathan arranged for a lease extension just in the nick of time in July. Jonathan and the freeholder via the management company ultimately agreed on an amount of £6,000 . If the lease had slipped lower than 80 years, the amount would have increased by a minimum £875.

Arnside case:

Last Winter we were approach by Dr E Alexander , who owned a studio flat in Arnside in September 1995. We are asked if we could approximate the premium could be for a 90 year extension to my lease. Comparable flats in Arnside with 100 year plus lease were worth £250,400. The average ground rent payable was £65 invoiced per annum. The lease expired on 21 March 2088. Taking into account 64 years left we calculated the compensation to the landlord to extend the lease to be within £19,000 and £22,000 plus professional charges.

Arnside case:

Last Winter we were e-mailed by Dr F Lee , who bought a basement flat in Arnside in August 1996. We are asked if we could approximate the compensation to the landlord could be to prolong the lease by an additional years. Comparable premises in Arnside with 100 year plus lease were worth £184,000. The mid-range ground rent payable was £55 billed quarterly. The lease elapsed on 26 November 2077. Having 53 years remaining we calculated the compensation to the freeholder to extend the lease to be within £28,500 and £33,000 plus professional charges.