It’s an underpublicised certainty that a Consett residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the deflation being disguised by increases in the Consett property market.Once your lease gets to 85ish years, you need to start thinking about a lease extension. If the number of years remaining dips below 80 years, you will end up paying half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property The majority of flat owners in Consett will be able to extend under the legislation; however a conveyancer should be able to clarify whether you qualify for an extension. In some situations you may not qualify. There are also strict deadlines and procedures to follow once the process is instigated and you will need to be guided by your conveyancer for the duration of the formalities.
Leasehold premises in Consett with in excess of one hundred years remaining on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such circumstances there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and maintenance charges warrant it.
| Lender | Requirement |
|---|---|
| Halifax | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancers that we work with handle Consett 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 conveyancing solicitor we work with provide it.
Last Christmas Harvey, started to get near to the 80-year threshold with the lease on his garden flat in Consett. Having purchased his flat twenty years ago, the unexpired term was of no relevance. Thankfully, he realised he would imminently be paying an inflated amount for Extending the lease. Harvey arranged for a lease extension just under the wire in June. Harvey and the freeholder ultimately settled on sum of £5,000 . If the lease had gone to less than 80 years, the premium would have become more costly by a minimum £1,100.
Last year we were e-mailed by Dr Stanley Lefebvre , who took over the lease of a one bedroom apartment in Consett in August 2012. We are asked if we could shed any light on how much (approximately) compensation to the landlord would likely be for a 90 year extension to my lease. Similar flats in Consett with an extended lease were worth £267,600. The mid-range amount of ground rent was £65 invoiced every twelve months. The lease ran out in 2093. Taking into account 67 years left we calculated the premium to the landlord for the lease extension to be within £14,300 and £16,400 exclusive of expenses.
In 2012 we were approached by Dr Jennifer Evans who, having owned a first floor flat in Consett in June 1997. We are asked if we could estimate the compensation to the landlord would be for a ninety year extension to my lease. Similar homes in Consett with a long lease were valued around £206,200. The mid-range amount of ground rent was £55 collected annually. The lease elapsed in 2082. Given that there were 56 years left we calculated the premium to the landlord to extend the lease to be between £31,400 and £36,200 exclusive of expenses.