East Dean leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease becomes more expensive. Legislation has been in place for sometime now which permits qualifying East Dean residential leaseholders to extend the terms of long leases. If you are a leasehold owner in East Dean you would be well advised to see if your lease has between 70 and 90 years remaining. There are compelling reasons why a East Dean leaseholder with a lease having around 80 years left should take action to ensure that a lease extension is effected without delay
Leasehold residencies in East Dean with over 100 years remaining on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little to be gained by buying the freehold unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| 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; |
| 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 |
| Yorkshire 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. |
Using our service will provide you increased control over the value of your East Dean leasehold, as your property will be more valuable and marketable in respect of lease length should you want to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Last Christmas Jake, came critically near to the eighty-year threshold with the lease on his studio flat in East Dean. In buying his flat two decades ago, the lease term was of no importance. Thankfully, he became aware that he would imminently be paying an inflated amount for a lease extension. Jake extended the lease just under the wire last March. Jake and the freeholder via the management company subsequently agreed on the final figure of £5,000 . If he failed to meet the deadline, the price would have become more exhorbitant by at least £950.
Last Summer we were called by Mr and Mrs. U Gómez , who bought a purpose-built flat in East Dean in June 2012. We are asked if we could shed any light on how much (roughly) price would be for a 90 year lease extension. Comparative properties in East Dean with an extended lease were valued about £250,400. The average amount of ground rent was £65 invoiced quarterly. The lease came to a finish on 17 February 2089. Having 64 years remaining we calculated the premium to the landlord to extend the lease to be between £19,000 and £22,000 not including fees.
In 2011 we were approached by Ms Lily Stewart who, having took over the lease of a studio apartment in East Dean in March 1995. The question was if we could approximate the price would likely be to prolong the lease by 90 years. Comparable flats in East Dean with 100 year plus lease were valued around £189,000. The average ground rent payable was £55 invoiced yearly. The lease terminated in 2078. Having 53 years unexpired we approximated the compensation to the landlord for the lease extension to be between £28,500 and £33,000 not including professional charges.