Owning a flat usually means owning a lease of the property, which has a set term of years. This lease will usually be granted for a fixed period of time , usually 99 or 125 years, although we have seen longer and shorter terms in Chester. Inevitably, the length of lease left reduces as time goes by. This is often overlooked and only becomes a problem when the flat or house needs to be sold or re-mortgaged. The shorter the lease the lower the value of the property and the more it will cost to obtain a lease extension. Eligible long lease owners in Chester have the legal entitlement to extend the lease for a further 90 years in accordance with Leasehold Reform legislation. You should give careful attention before delaying your Chester lease extension. Putting off the cost now only increases the price you will eventually incur for a lease extension
Leasehold premises in Chester with more than 100 years left on the lease are often referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and maintenance charges warrant it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset of the mortgage. |
| 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. |
Irrespective of whether you are a tenant or a freeholder in Chester,the lease extension lawyers that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Chester valuers.
Two years ago Ibrahim, started to get near to the eighty-year threshold with the lease on his one bedroom flat in Chester. Having purchased his home twenty years ago, the length of the lease was of little importance. Luckily, it dawned on him that he would soon be paying an escalated premium for Extending the lease. Ibrahim arranged for a lease extension at the eleventh hour in April. Ibrahim and the landlord who owned the flat above subsequently agreed on the final figure of £5,500 . If the lease had gone lower than 80 years, the premium would have increased by at least £950.
In 2012 we were contacted by Dr Tommy López who, having acquired a newly refurbished flat in Chester in March 2001. The question was if we could shed any light on how much (roughly) premium would be to extend the lease by ninety years. Identical premises in Chester with an extended lease were in the region of £280,000. The mid-range ground rent payable was £45 collected monthly. The lease concluded in 2096. Given that there were 70 years unexpired we approximated the premium to the freeholder for the lease extension to be within £12,400 and £14,200 exclusive of expenses.
Mrs H Lefèvre moved into a purpose-built flat in Chester in August 2000. We are asked if we could approximate the price would be to prolong the lease by an additional years. Similar properties in Chester with an extended lease were in the region of £218,400. The average ground rent payable was £60 billed per annum. The lease expired in 2085. Taking into account 59 years unexpired we calculated the premium to the landlord for the lease extension to be between £27,600 and £31,800 exclusive of legals.