If you are facing a significant premium because your lease in Farnham Royal has dropped toward the 80-year mark, your previous lawyer may be at fault. Our panel of experts specialise in recovering lease extension costs from negligent firms who failed to protect your investment.
Top reasons for lease extension now:
Increase your lease and increase your Farnham Royal property value
For anyone whose Farnham Royal property is held on a long lease, the message is clear –
if nothing is done, your property will ultimately revert to your landlord, leaving you empty-handed.
The shorter the lease the less it is worth and the more expensive it will be to obtain a lease extension.
An extended lease has roughly the same value as a freehold
It is generally accepted that a residential leasehold with in excess of 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 35 years remaining, the property will be equivalent in value to a freehold for many years ahead.
Mortgage lenders may not finance a property with a short lease
Mortgage companies do not like short residential leases. You are likely to encounter difficulties if you need to sell your flat in Farnham Royal if the remaining lease term is below the criteria set by most lenders. Different lenders have different criteria but in the main they are looking for an unexpired term of at least seventy years.
| Lender |
Requirement
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|---|
| Barclays plc |
Leases with less than 70 years at the commencement of the mortgage are not acceptable.
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;
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| Barnsley Building Society |
60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term.
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| Birmingham Midshires |
Minimum 70 years from the date of the mortgage.
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| 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 a proposed Lease Extension does not meet these requirements, however you feel that this is in the best interest for our mutual client, please refer all details to the Issuing Office for us to consider.
Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning.
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| 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.
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Why use us for your lease extension in Farnham Royal?
The conveyancers that we work with undertake 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.
Farnham Royal Lease Extension Example Cases:
John, Farnham Royal, Buckinghamshire
Last year John, came precariously near to the eighty-year threshold with the lease on his first floor flat in Farnham Royal. In buying his property two decades ago, the length of the lease was of no importance. As luck would have it, he recognised he needed to take action soon on Extending the lease. John arranged for a lease extension just under the wire in January. John and the landlord who owned the flat above in the end settled on the final figure of £6,000 . If he not met the deadline, the amount would have escalated by at least £950.
Farnham Royal case:
Dr M Cox owned a garden apartment in Farnham Royal in September 2002. We are asked if we could approximate the compensation to the landlord would likely be to prolong the lease by a further 90 years. Comparative properties in Farnham Royal with 100 year plus lease were in the region of £285,000. The average amount of ground rent was £55 billed yearly. The lease finished on 3 November 2105. Having 79 years as a residual term we approximated the compensation to the landlord to extend the lease to be between £13,300 and £15,400 exclusive of legals.
Farnham Royal case:
In 2010 we were contacted by Ms Jessica Miller who, having was assigned a lease of a newly refurbished flat in Farnham Royal in November 2000. The dilemma was if we could approximate the compensation to the landlord would be to extend the lease by an additional years. Comparable premises in Farnham Royal with 100 year plus lease were in the region of £193,400. The mid-range amount of ground rent was £65 billed annually. The lease ran out in 2085. Having 59 years unexpired we calculated the compensation to the landlord to extend the lease to be within £21,900 and £25,200 not including legals.