On the balance of probabilities if you own a flat in Bishops Cleeve you actually own a long leasehold interest over your property
Leasehold premises in Bishops Cleeve with more than one hundred years unexpired on the lease are often regarded as a ‘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 freehold unless savings on ground rent and service 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. |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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. |
| 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. |
Using our service gives you enhanced control over the value of your Bishops Cleeve leasehold, as your property will be more valuable and marketable in terms of lease length should you want to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
During the course of the last few months Jake, came seriously close to the eighty-year threshold with the lease on his first floor apartment in Bishops Cleeve. Having bought his property twenty years ago, the length of the lease was of no bearing. Fortunately, he became aware that he would soon be paying way over the odds for a lease extension. Jake extended the lease just under the wire in January. Jake and the freeholder subsequently agreed on an amount of £5,500 . If the lease had fallen lower than eighty years, the amount would have become more exhorbitant by a minimum £1,125.
Last Autumn we were contacted by Mr and Mrs. L Gray , who completed a newly refurbished apartment in Bishops Cleeve in October 2004. The question was if we could approximate the price would likely be to extend the lease by ninety years. Comparable residencies in Bishops Cleeve with an extended lease were worth £216,000. The average amount of ground rent was £60 invoiced yearly. The lease came to a finish in 2084. Considering the 58 years unexpired we approximated the premium to the freeholder for the lease extension to be between £28,500 and £33,000 plus fees.
In 2009 we were e-mailed by Mr and Mrs. I Stewart who, having purchased a garden apartment in Bishops Cleeve in September 2002. We are asked if we could estimate the premium could be to extend the lease by an additional years. Identical homes in Bishops Cleeve with an extended lease were valued about £200,000. The average ground rent payable was £50 billed annually. The lease ended in 2104. Taking into account 78 years outstanding we approximated the compensation to the freeholder to extend the lease to be within £8,600 and £9,800 exclusive of legals.