Unfortunately that a Caversham residential lease is a deteriorating asset. As the lease term reduces so does the value of the property. The extent of this is taken for granted in the early years due to the loss of value being disguised by increases in the Caversham property prices.Once your lease nears 85ish years, you should start considering a lease extension. If the number of years remaining slips under 80 years, you will end up paying 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of additional value that a lease extension will add the property Most flat owners in Caversham will be able to extend under the legislation; however a conveyancer will be able to confirm if you are eligibility. In some cases you may not be entitled. There are also strict timetables and procedures to follow once the process has commenced and you will need to be guided by your conveyancing solicitor from beginning to end of the formalities.
It is conventional wisdom that a residential leasehold with more than one hundred years unexpired lease term is worth approximately the same as a freehold. Where an additional ninety years added to any lease with more than 35 years left, the residence will be worth the same as a freehold for decades to come.
| 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. |
| 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 | If the property is leasehold, the remaining unexpired lease term at the end of the new mortgage term must be at least 50 years where any part of the mortgage is on Interest Only and 30 years if all loan parts are on Capital Repayment and Interest. You must report the unexpired lease term to us and await our instructions if:
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The conveyancing solicitors that we work with procure Caversham 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 lawyer we work with provide it.
Following unsuccessful negotiations with the freeholder of her ground floor apartment in Caversham, Abigail commenced the lease extension process just as her lease was approaching the crucial eighty-year threshold. The lease extension was finalised in March 2010. The landlord’s fees were negotiated to below 700 GBP.
In 2011 we were approached by Ms E Vincent who, having acquired a ground floor flat in Caversham in October 2009. The question was if we could approximate the premium would be to extend the lease by 90 years. Identical flats in Caversham with a long lease were worth £254,200. The average amount of ground rent was £60 collected per annum. The lease concluded on 24 May 2077. Considering the 51 years unexpired we estimated the compensation to the freeholder to extend the lease to be between £43,700 and £50,600 plus professional charges.
In 2010 we were phoned by Mrs S Garcia who, having moved into a recently refurbished flat in Caversham in July 1997. The dilemma was if we could shed any light on how much (roughly) price would likely be for a 90 year extension to my lease. Comparable homes in Caversham with an extended lease were in the region of £215,600. The average amount of ground rent was £45 invoiced annually. The lease lapsed on 11 January 2088. Given that there were 62 years left we approximated the compensation to the freeholder for the lease extension to be within £18,100 and £20,800 plus costs.