For anyone whose Cheltenham property is held on a long lease, our message is clear – if nothing is done, the property will ultimately revert to your landlord, leaving you empty-handed. The shorter the lease the lower the value of the property and the more expensive it will be to extend the lease.
It is generally considered that a residential leasehold with in excess of one hundred years remaining is worth approximately the same as a freehold. Where an further 90 years added to any lease with more than 45 years remaining, the premises will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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 | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| 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. |
The lawyers that we work with procure Cheltenham 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.
In recent months Harrison, started to get close to the eighty-year threshold with the lease on his purpose- built apartment in Cheltenham. In buying his flat 18 years ago, the length of the lease was of no interest. Luckily, he noticed he would imminently be paying an escalated premium for a lease extension. Harrison arranged for a lease extension at the eleventh hour in July. Harrison and the freeholder via the managing agents in the end agreed on an amount of £5,500 . If the lease had gone lower than 80 years, the sum would have escalated by at least £1,075.
In 2013 we were approached by Dr T King who, having purchased a basement flat in Cheltenham in May 1996. The dilemma was if we could shed any light on how much (roughly) price could be for a ninety year extension to my lease. Comparable properties in Cheltenham with a long lease were in the region of £255,000. The mid-range amount of ground rent was £50 invoiced monthly. The lease elapsed on 3 January 2096. Considering the 70 years unexpired we estimated the compensation to the freeholder for the lease extension to be within £9,500 and £11,000 exclusive of expenses.
In 2014 we were approached by Mr and Mrs. A Wood who, having completed a garden apartment in Cheltenham in February 2007. The question was if we could shed any light on how much (approximately) premium would likely be to prolong the lease by a further 90 years. Comparable residencies in Cheltenham with a long lease were worth £246,800. The mid-range amount of ground rent was £60 invoiced per annum. The lease elapsed in 2076. Having 50 years outstanding we estimated the premium to the landlord to extend the lease to be between £44,700 and £51,600 not including fees.