The market value of Cheltenham leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of a lease extension can increase substantially once the unexpired lease term is less than 80 years
It is conventional wisdom that a residential leasehold with over 100 years remaining is worth roughly the equivalent as a freehold. Where an further 90 years added to any lease with more than 30 years left, the premises will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Godiva Mortgages | 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| 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. |
Irrespective of whether you are a tenant or a landlord in Cheltenham,the lease extension experts 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.
Joseph owned a 2 bedroom flat in Cheltenham on the market with a lease of a few days over 72 years outstanding. Joseph on an informal basis contacted his landlord being a well known London-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years subject to an increased rent to £100 per annum. Ordinarily, ground rent would not be payable on a lease extension were Joseph to invoke his statutory right. Joseph obtained expert advice and was able to make a more informed decision and deal with the matter and sell the flat.
Last Summer we were approach by Dr Sarah Cox , who acquired a purpose-built apartment in Cheltenham in May 1997. The question was if we could approximate the premium would likely be for a 90 year lease extension. Comparable properties in Cheltenham with an extended lease were worth £242,600. The average amount of ground rent was £45 billed yearly. The lease lapsed on 19 January 2093. Having 67 years as a residual term we calculated the compensation to the landlord to extend the lease to be within £11,400 and £13,200 exclusive of fees.
Last month we were phoned by Mr Y Thompson , who bought a ground floor apartment in Cheltenham in July 2009. We are asked if we could approximate the compensation to the landlord would likely be for a 90 year extension to my lease. Identical properties in Cheltenham with 100 year plus lease were worth £280,000. The average ground rent payable was £55 billed yearly. The lease expired in 2104. Considering the 78 years remaining we calculated the compensation to the landlord to extend the lease to be between £13,300 and £15,400 plus costs.