It’s an underpublicised truth that a Bollington residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the reduction being disguised by increases in the Bollington property prices.Where your lease has approximately 90 years left, you need to start thinking about a lease extension. If the number of years remaining dips under eighty years, you will end up paying 50% of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property Most leasehold owners in Bollington will be able to extend under the legislation; however a lawyer should be able to clarify if you qualify for an extension. In some cases you may not qualify. There are also strict timeframes and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancing solicitor throughout the process.
It is conventional wisdom that a residential leasehold with in excess of one hundred years unexpired lease term is worth roughly the same as a freehold. Where an additional ninety years added to all but the shortest lease, the property will be worth the same as a freehold for many years in the future.
| 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 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
The lawyers that we work with handle Bollington 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.
Following unsuccessful correspondence with the freeholder of her studio flat in Bollington, Shannon initiated the lease extension process just as the lease was nearing the all-important 80-year deadline. The transaction completed in August 2011. The freeholder’s charges were negotiated to under five hundred pounds.
Last Summer we were e-mailed by Dr Sarah Allen , who acquired a one bedroom apartment in Bollington in May 2004. We are asked if we could estimate the price would likely be to prolong the lease by 90 years. Comparative flats in Bollington with 100 year plus lease were worth £300,000. The mid-range ground rent payable was £50 invoiced quarterly. The lease elapsed in 2101. Taking into account 75 years left we approximated the compensation to the freeholder to extend the lease to be within £8,600 and £9,800 not including fees.
Last Autumn we were called by Mr and Mrs. B Ricardo , who bought a newly refurbished apartment in Bollington in April 2009. The dilemma was if we could shed any light on how much (approximately) compensation to the landlord could be for a ninety year extension to my lease. Similar properties in Bollington with a long lease were worth £250,400. The mid-range ground rent payable was £65 collected yearly. The lease lapsed in 2090. Taking into account 64 years as a residual term we calculated the premium to the freeholder to extend the lease to be within £19,000 and £22,000 exclusive of fees.