Frant leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease becomes more expensive. Legislation has been in place for sometime now which entitles qualifying Frant residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Frant you must check if your lease has between 70 and 90 years left. In particular once the remaining lease term slips under 80 years, the amount payable for any lease extension increases dramatically as part of the premium you will incur is what is known as a marriage value
It is conventional wisdom that a residential leasehold with over 100 years unexpired lease term is worth roughly the same as a freehold. Where an additional 90 years added to any lease with more than 35 years unexpired, the premises will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| 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; |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date 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. |
Retaining our service gives you better control over the value of your Frant leasehold, as your property will be more valuable and saleable in relation to the lease length should you wish 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.
Subsequent to unsuccessful negotiations with the freeholder of her purpose-built apartment in Frant, Olivia initiated the lease extension process as the 80 year threshold was fast nearing. The lease extension completed in July 2005. The freeholder’s costs were kept to an absolute minimum.
In 2013 we were phoned by Ms C Howard who, having moved into a studio flat in Frant in September 2006. The question was if we could estimate the premium would likely be to prolong the lease by ninety years. Comparative properties in Frant with a long lease were worth £191,000. The average ground rent payable was £65 collected every twelve months. The lease expired on 10 January 2083. Having 58 years as a residual term we approximated the premium to the landlord for the lease extension to be between £23,800 and £27,400 exclusive of legals.
Last Autumn we were called by Mr Callum Stewart , who completed a garden apartment in Frant in July 2001. We are asked if we could shed any light on how much (approximately) premium would be to extend the lease by a further 90 years. Identical residencies in Frant with 100 year plus lease were valued around £250,000. The mid-range ground rent payable was £50 billed monthly. The lease terminated in 2094. Considering the 69 years remaining we calculated the premium to the freeholder for the lease extension to be between £9,500 and £11,000 plus fees.