The re-sale value of a leasehold property in Bishops Cleeve is impacted by how long the lease has left to run. If it is close to or fewer than 80 years you should expect difficulties on re-sale, so it is advisable to arrange for the lease to be extended prior to buying. It is ideal to start the process of extending the lease is when a lease still has 82 years remaining so that a lease extension can be finalised prior to the 80 year mark. Leasehold Reform legislation entitles Bishops Cleeve qualifying lessees to obtain a lease extension of ninety years in addition to the remaining lease term at a peppercorn rent (that is, rent free). The intention of the valuation is to determine the amount payable by the lessee to the freeholder for the purchase of the lease extension.
It is generally accepted that a residential leasehold with in excess of one hundred years unexpired lease term is worth roughly the same as a freehold. Where an further 90 years added to any lease with more than 45 years unexpired, the property will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Chelsea 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. |
| 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. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| 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 |
Regardless of whether you are a tenant or a freeholder in Bishops Cleeve,the lease extension solicitors that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Bishops Cleeve valuers.
During the course of the last few months Ben, started to get near to the 80-year threshold with the lease on his purpose- built flat in Bishops Cleeve. Having bought his flat 19 years ago, the lease term was of little relevance. Thankfully, he realised he would imminently be paying way over the odds for Extending the lease. Ben arranged for a lease extension at the eleventh hour last June. Ben and the landlord subsequently settled on an amount of £6,000 . If he failed to meet the deadline, the figure would have become more exhorbitant by a minimum £1,100.
In 2012 we were e-mailed by Dr A Patel who, having purchased a garden apartment in Bishops Cleeve in August 2007. The question was if we could estimate the premium would be to prolong the lease by 90 years. Similar properties in Bishops Cleeve with a long lease were worth £260,200. The mid-range amount of ground rent was £65 collected per annum. The lease concluded in 2092. Considering the 66 years as a residual term we estimated the compensation to the landlord for the lease extension to be within £16,200 and £18,600 not including costs.
Last Autumn we were e-mailed by Mr and Mrs. F Stewart , who acquired a purpose-built apartment in Bishops Cleeve in May 1995. We are asked if we could estimate the price would be to extend the lease by a further 90 years. Identical homes in Bishops Cleeve with an extended lease were in the region of £198,800. The average ground rent payable was £55 billed per annum. The lease came to a finish on 8 July 2081. Taking into account 55 years unexpired we approximated the premium to the landlord for the lease extension to be within £33,300 and £38,400 plus costs.