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Why you should start your Buxton lease extension


Why you should start your Buxton lease extension today:

Increase your lease and increase your Buxton property value

The re-sale value of a leasehold property in Buxton is impacted by how many years the lease has remaining. If it is close to or less than eighty years you should expect difficulties on re-sale, so it is advisable to arrange for the lease to be extended before buying. Ideally one should start the process of extending the lease is when a lease still has 82 years to run so that formalities can be concluded ahead of the eighty year cut off point. Statute enables Buxton qualifying lessees to acquire a new lease which will be for the balance of the existing lease plus a further term of ninety years. The purpose of the valuation is to arrive at an opinion of the premium payable by the lessee to the freeholder for the purchase of the lease extension.

Buxton property with a lease extension is almost the same value as a freehold

It is generally accepted that a residential leasehold with over one hundred years remaining is worth roughly the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the residence will be worth the same as a freehold for many years ahead.

Banks and Building Societies will not grant a mortgage on a short lease

Banks and Building Societies have specific criteria when lending monies charged on leasehold homes. Some will simply refuse lend at all once the residual lease term drops below a certain unexpired lease term. Many Lending institutions will not consider property with a remaining below seventy years as adequate security. In addition to this being important when selling, it is also relevant where you are intending to refinance your Buxton home.

Lender Requirement
Barnsley Building Society 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term.
National Westminster Bank Mortgage term plus 30 years.
Nationwide Building Society - Our minimum unexpired lease term is 55 years, except where lending is over 85% of the purchase price/valuation on a second hand flat, in which case our minimum unexpired term is 90 years.
- There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start).

Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer
- Where lending is over 85% of the purchase price/valuation on a second hand flat and the unexpired lease term on the offer is 90 years or more - only advise us if the actual lease term is less than 90 years.

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 55 years
- Unexpired lease term less than 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period is less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 55 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial, etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years (Minimum 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat)
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (Will be declined)
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house (does not apply to Shared Ownership)
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn Ground Rent (Annual Rent) charges

For the avoidance of doubt, any New Build properties completed but not sold pre-30 June 2022 will only be acceptable if the Lease conforms to the above guidance.

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years.

Lease Extensions

We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to Issuing Office.

Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning.
Royal Bank of Scotland Mortgage term plus 30 years.
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.

Get in touch with one of our Buxton lease extension solicitors or enfranchisement solicitors

Using our service will provide you better control over the value of your Buxton leasehold, as your property will be more valuable and marketable in terms of lease length should you decide to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.

Buxton Lease Extension Case Studies:

Austin, Buxton, Derbyshire

In recent months Austin, started to get close to the eighty-year mark with the lease on his basement apartment in Buxton. Having bought his property two decades ago, the unexpired term was of minimal relevance. As luck would have it, he realised he would soon be paying way over the odds for Extending the lease. Austin extended the lease at the eleventh hour last January. Austin and the landlord who owned the flat above subsequently agreed on the final figure of £5,000 . If the lease had slipped lower than eighty years, the amount would have escalated by at least £1,150.

Buxton case:

Last Autumn we were phoned by Mr and Mrs. J Williams , who was assigned a lease of a first floor flat in Buxton in August 2001. We are asked if we could estimate the price would be to prolong the lease by a further 90 years. Similar homes in Buxton with an extended lease were worth £233,200. The mid-range ground rent payable was £60 invoiced per annum. The lease came to a finish on 5 March 2086. Having 61 years as a residual term we estimated the compensation to the freeholder for the lease extension to be between £22,800 and £26,400 exclusive of costs.

Buxton case:

In 2009 we were contacted by Dr C Cox who, having completed a studio apartment in Buxton in March 2012. We are asked if we could approximate the compensation to the landlord would be to prolong the lease by a further 90 years. Comparative properties in Buxton with 100 year plus lease were worth £171,800. The mid-range ground rent payable was £55 invoiced quarterly. The lease finished in 2075. Having 50 years remaining we approximated the compensation to the landlord for the lease extension to be within £32,300 and £37,400 plus expenses.