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Why you should commence your Dronfield lease extension


Top reasons for lease extension now:

Increase your lease and increase your Dronfield property value

Owning a apartment usually means owning a lease of the property, which has a set term of years. The lease will ordinarily be granted for a fixed period of time , ordinarily 99 or 125 years, although we have seen longer and shorter terms in Dronfield. Clearly, the length of lease remaining reduces as time goes by. This may pass by relatively unnoticed when the property needs to be sold or re-mortgaged. The shorter the lease the lower the value of the property and the more expensive it will be to extend the lease. Qualifying long lease owners in Dronfield have the legal entitlement to extend the lease for a further ninety years under legislation. Do give due attention before putting off your Dronfield lease extension. Holding off that expense now simply increases the price you will eventually incur for a lease extension

An extended lease has roughly the same value as a freehold

Leasehold premises in Dronfield with over one hundred years outstanding on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such circumstances there is often little upside in buying the freehold unless savings on ground rent and maintenance charges merit it.

Lenders may decide not to issue a mortgage with a short lease

Mortgage companies are really restricting their approach as regards to properties in Dronfield with short leases. For instance you might discover that their lending requirements are stricter and that they alter interest rates depending on how many years are left on the lease. Some may even refuse to lend completely, so where you needed to sell, your remaining options would be to find a cash purchaser, or try your luck at auction thus restricting the number of prospective purchasers.

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.
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.
Halifax Minimum 70 years from the date of the mortgage.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges

For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years

LEASE EXTENSIONS

We require all lease extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to the Issuing Office

Why use us for your lease extension in Dronfield?

Irrespective of whether you are a tenant or a landlord in Dronfield,the lease extension solicitors that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Dronfield valuers.

Dronfield Lease Extension Case Studies:

Abigail, Dronfield, Derbyshire,

After protracted negotiations with the landlord of her studio apartment in Dronfield, Abigail started the lease extension process just as her lease was approaching the all-important 80-year deadline. The transaction was finalised in March 2014. The freeholder’s costs were kept to an absolute minimum.

Dronfield case:

Last June we were contacted by Mr and Mrs. B Hall , who took over the lease of a newly refurbished apartment in Dronfield in September 2001. We are asked if we could shed any light on how much (roughly) compensation to the landlord would be for a 90 year lease extension. Comparable homes in Dronfield with an extended lease were worth £233,200. The mid-range amount of ground rent was £60 invoiced annually. The lease ended in 2085. Considering the 61 years remaining we estimated the compensation to the landlord for the lease extension to be between £22,800 and £26,400 plus fees.

Dronfield case:

In 2009 we were phoned by Mr N Bell who, having was assigned a lease of a one bedroom flat in Dronfield in January 2005. We are asked if we could shed any light on how much (roughly) price would be to extend the lease by an additional years. Identical homes in Dronfield with an extended lease were worth £171,800. The mid-range amount of ground rent was £55 invoiced per annum. The lease lapsed in 2074. Having 50 years as a residual term we approximated the compensation to the landlord for the lease extension to be between £32,300 and £37,400 exclusive of fees.