Dunmow leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease gets more expensive. Legislation has been in place for sometime now allowing qualifying Dunmow residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Dunmow you should check if your lease has between seventy and 90 years remaining. In particular once the remaining lease term slips under eighty years, the compensation to the landlord for any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
It is generally accepted that a property with in excess of one hundred years unexpired lease term is worth roughly the same as a freehold. Where an additional ninety years added to any lease with more than 45 years unexpired, the property will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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 |
Retaining our service will provide you better control over the value of your Dunmow leasehold, as your property will be more valuable and marketable in respect of lease length should you decide to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Two years ago Freddie, came dangerously close to the 80-year mark with the lease on his two bedroom flat in Dunmow. Having bought his property 18 years previously, the unexpired term was of little significance. Luckily, he noticed he would imminently be paying an escalated premium for Extending the lease. Freddie was able to extend his lease just in the nick of time last March. Freddie and the freeholder ultimately agreed on the final figure of £6,000 . If he failed to meet the deadline, the price would have gone up by a minimum £1,000.
In 2014 we were called by Mr Jasper Morgan who, having took over the lease of a first floor flat in Dunmow in June 2001. The dilemma was if we could estimate the price could be for a 90 year extension to my lease. Similar flats in Dunmow with a long lease were in the region of £208,600. The average ground rent payable was £60 invoiced quarterly. The lease ended on 24 June 2082. Given that there were 57 years left we estimated the premium to the landlord to extend the lease to be within £30,400 and £35,200 plus professional charges.
In 2010 we were contacted by Dr P James who, having owned a one bedroom apartment in Dunmow in May 1996. We are asked if we could estimate the compensation to the landlord could be to extend the lease by an additional years. Identical premises in Dunmow with 100 year plus lease were in the region of £200,000. The average ground rent payable was £50 collected every twelve months. The lease elapsed in 2102. Given that there were 77 years left we estimated the compensation to the freeholder for the lease extension to be between £8,600 and £9,800 plus legals.