Unfortunately that a Bargoed residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the first few years due to the loss of value being disguised by increases in the Bargoed property prices.Where your lease has approximately 90 years left, you need to start considering a lease extension. If lease term dips below 80 years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property The majority of leasehold owners in Bargoed will be able to extend under the legislation; however a conveyancing solicitor should be able to clarify if you qualify for an extension. In some situations you may not qualify. There are also strict timetables and procedures to follow once the process has commenced and you will need to be guided by your lawyer from beginning to end of the process.
It is conventional wisdom that a property with over one hundred years remaining is worth approximately the equivalent as a freehold. Where an additional 90 years added to any lease with more than 35 years left, the residence will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Coventry Building Society | 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| Yorkshire Building Society | 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. |
The conveyancing solicitors that we work with procure Bargoed 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.
Evan owned a conversion flat in Bargoed on the market with a lease of fraction over 72 years unexpired. Evan informally contacted his landlord being a well known London-based freehold company and enquired on a premium to extend the lease. The landlord was prepared to grant an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £200 per annum. No ground rent would be due on a lease extension were Evan to invoke his statutory right. Evan obtained expert advice and was able to make a more informed judgement and deal with the matter and ending up with a market value flat.
Dr Blake Davies acquired a newly refurbished flat in Bargoed in March 1996. The dilemma was if we could approximate the price would be for a ninety year lease extension. Identical residencies in Bargoed with an extended lease were worth £240,600. The mid-range ground rent payable was £60 collected quarterly. The lease lapsed in 2086. Considering the 62 years unexpired we approximated the compensation to the landlord for the lease extension to be between £21,900 and £25,200 exclusive of legals.
Last Autumn we were contacted by Mr and Mrs. L Stewart , who took over the lease of a first floor flat in Bargoed in September 2001. The question was if we could approximate the premium could be for a 90 year extension to my lease. Identical premises in Bargoed with an extended lease were valued about £174,200. The mid-range amount of ground rent was £55 invoiced every twelve months. The lease lapsed on 12 September 2075. Given that there were 51 years unexpired we estimated the compensation to the landlord to extend the lease to be within £31,400 and £36,200 not including costs.