Ashington residential property owned on a long lease is a depreciating asset because a leaseholder merely owns the property for a set term.
Leasehold properties in Ashington with in excess of 100 years outstanding on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such situations there is often little upside in buying the freehold unless savings on ground rent and maintenance charges justify it.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 85 years from the date of completion of the mortgage. Please ensure that you explain the implications of a short term lease to the borrower. |
| 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; |
| Godiva Mortgages | A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
The conveyancers that we work with handle Ashington 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.
Last year Seth, came dangerously close to the eighty-year threshold with the lease on his two bedroom flat in Ashington. In buying his flat 18 years previously, the length of the lease was of minimal importance. Luckily, he recognised he needed to take steps soon on Extending the lease. Seth extended the lease just ahead of time in July. Seth and the landlord ultimately agreed on an amount of £5,000 . If the lease had slid to less than 80 years, the sum would have increased by a minimum £1,075.
In 2010 we were e-mailed by Ms Amelia Gunderson who, having moved into a one bedroom apartment in Ashington in May 2010. The dilemma was if we could estimate the premium would likely be for a ninety year extension to my lease. Comparable residencies in Ashington with a long lease were worth £205,000. The average ground rent payable was £50 billed per annum. The lease terminated on 9 August 2104. Taking into account 79 years remaining we calculated the premium to the landlord to extend the lease to be within £8,600 and £9,800 exclusive of legals.
Last Spring we were phoned by Mr and Mrs. G Allen , who moved into a garden apartment in Ashington in February 2006. The question was if we could approximate the price could be to extend the lease by ninety years. Similar flats in Ashington with 100 year plus lease were in the region of £275,000. The mid-range ground rent payable was £65 billed annually. The lease ended in 2093. Having 68 years left we approximated the premium to the freeholder to extend the lease to be within £12,400 and £14,200 plus expenses.