Why you should commence your Cheltenham lease extension

Why you should commence your Cheltenham lease extension today:

A Cheltenham leasehold property depreciates with the years remaining on the lease.

Cheltenham leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease becomes more expensive. Most owners of residential leasehold property in Cheltenham enjoy rights under legislation to extend the terms of their leases. Where you are a leasehold owner in Cheltenham you would be well advised to investigate if your lease has between seventy and ninety years left. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension sharply increases as an element of the premium you pay is what is known as a marriage value

An extended lease has roughly the same value as a freehold

Leasehold properties in Cheltenham with over 100 years remaining on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little upside in buying the freehold unless savings on ground rent and service charges justify it.

Banks and Building Societies may not finance a property with a short lease

The propensity since over the last decade has been for banks to tighten lending criteria generally - this has extended to the property over which the mortgage is to be granted. This has meant the unexpired lease term required by banks has increased. In the past lenders were content with 25 years plus the term of the loan - typically fifty year leases but those requirements evolved by the requirement for lengthy leases - many use a minimum term of 75 years as a prerequisite.

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

Regardless of whether you are a tenant or a freeholder in Cheltenham,the lease extension solicitors that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Cheltenham valuers.

Cheltenham Lease Extension Case Summaries:

Nathan, Cheltenham, Gloucestershire

Last year Nathan, started to get near to the eighty-year mark with the lease on his ground floor flat in Cheltenham. In buying his property 18 years previously, the unexpired term was of minimal concern. As luck would have it, it dawned on him that he needed to take action soon on a lease extension. Nathan was able to extend his lease just under the wire in August. Nathan and the freeholder subsequently agreed on the final figure of £5,000 . If he had missed the deadline, the price would have become more costly by at least £1,050.

Cheltenham case:

Mr Thomas Khan completed a recently refurbished flat in Cheltenham in November 2011. We are asked if we could shed any light on how much (roughly) compensation to the landlord would be to prolong the lease by an additional years. Identical properties in Cheltenham with a long lease were in the region of £166,400. The average amount of ground rent was £60 collected quarterly. The lease lapsed on 25 November 2080. Taking into account 54 years unexpired we calculated the compensation to the landlord to extend the lease to be within £32,300 and £37,400 not including costs.

Cheltenham case:

In 2012 we were contacted by Dr Owen Peterson who, having purchased a garden flat in Cheltenham in June 2004. The question was if we could approximate the premium would likely be to prolong the lease by an additional years. Comparable flats in Cheltenham with an extended lease were in the region of £232,800. The mid-range amount of ground rent was £45 collected quarterly. The lease came to a finish on 2 July 2091. Having 65 years left we estimated the premium to the freeholder for the lease extension to be between £13,300 and £15,400 exclusive of expenses.