Unfortunately that a Farnham Royal residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the deflation being disguised by increases in the Farnham Royal property market.Once your lease gets to 85ish years, you should start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease dips lower than eighty years - otherwise a higher premium will be due. The majority of flat owners in Farnham Royal will be able to extend under the legislation; however a conveyancer will be able to clarify whether you are eligibility. In some situations you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process is instigated and you will need to be guided by your conveyancing solicitor throughout the formalities.
It is conventional wisdom that a property with over one hundred years unexpired lease term is worth approximately the same as a freehold. Where an additional 90 years added to any lease with more than 35 years remaining, the residence will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Leeds Building Society | 85 years remaining from the start 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. |
| 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. |
The conveyancing solicitors that we work with procure Farnham Royal 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 lawyer we work with provide it.
Subsequent to lengthy negotiations with the landlord of her garden apartment in Farnham Royal, Bethany started the lease extension process just as her lease was approaching the all-important eighty-year threshold. The lease extension was concluded in May 2005. The freeholder’s costs were kept to an absolute minimum.
Last Autumn we were approach by Mrs Catherine Clark , who completed a first floor flat in Farnham Royal in June 2010. We are asked if we could approximate the compensation to the landlord would likely be to extend the lease by a further 90 years. Identical flats in Farnham Royal with a long lease were valued about £270,000. The mid-range amount of ground rent was £55 collected annually. The lease came to a finish on 18 August 2099. Taking into account 74 years left we approximated the compensation to the landlord for the lease extension to be within £9,500 and £11,000 not including costs.
Last May we were phoned by Mrs F Alexander , who bought a one bedroom flat in Farnham Royal in June 2009. We are asked if we could approximate the premium could be for a ninety year lease extension. Similar properties in Farnham Royal with an extended lease were valued about £166,400. The mid-range ground rent payable was £60 invoiced annually. The lease termination date was in 2079. Given that there were 54 years as a residual term we calculated the premium to the landlord for the lease extension to be between £32,300 and £37,400 not including legals.