Cirencester leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease gets more expensive. The majority of owners of residential leasehold property in Cirencester enjoy rights under legislation to extend the terms of their leases. Where you are a leasehold owner in Cirencester you should investigate if your lease has between 70 and ninety years left. In particular once the remaining lease term slips under 80 years, the cost of any lease extension increases dramatically as part of the premium you will incur is what is known as a marriage value
Leasehold residencies in Cirencester with in excess of one hundred years remaining on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little upside in buying the freehold unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| 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. |
| Halifax | Minimum 70 years from the date 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. |
The lawyers that we work with handle Cirencester 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.
After protracted correspondence with the freeholder of her one bedroom flat in Cirencester, Daisy initiated the lease extension process just as her lease was coming close to the all-important 80-year threshold. The transaction completed in January 2015. The landlord’s charges were kept to an absolute minimum.
Mr O Morris completed a first floor flat in Cirencester in April 2005. We are asked if we could estimate the price would likely be to extend the lease by 90 years. Identical premises in Cirencester with 100 year plus lease were in the region of £210,600. The average ground rent payable was £45 billed per annum. The lease concluded in 2087. Having 62 years left we estimated the compensation to the landlord for the lease extension to be within £18,100 and £20,800 exclusive of legals.
Last Spring we were approach by Mr Daniel Adams , who owned a one bedroom flat in Cirencester in November 1998. The question was if we could shed any light on how much (approximately) premium could be to prolong the lease by ninety years. Comparative properties in Cirencester with an extended lease were in the region of £265,000. The mid-range ground rent payable was £50 billed quarterly. The lease elapsed in 2098. Given that there were 73 years outstanding we approximated the compensation to the freeholder for the lease extension to be between £9,500 and £11,000 not including fees.