Gilberdyke Lease Extension - Free Consultation

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Main reasons to start your Gilberdyke lease extension


Why you should start your Gilberdyke lease extension today:

A Gilberdyke lease depreciates with the years remaining on the lease.

Unfortunately that a Gilberdyke residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the first few years due to the depreciation being disguised by increases in the Gilberdyke property market.Where your lease has approximately ninety years left, you should start considering a lease extension. If the number of years remaining drops under 80 years, you will end up paying half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property The majority of flat owners in Gilberdyke will be able to extend under the legislation; however a conveyancing solicitor will be able to confirm whether you are eligibility. In some situations you may not be entitled. There are also strict timetables and procedures to follow once the process is initiated and you will need to be guided by your lawyer for the duration of the formalities.

Gilberdyke property with a lease extension is almost the same value as a freehold

It is conventional wisdom that a property with more than one hundred years remaining is worth approximately the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the property will be worth the same as a freehold for many years ahead.

Lending institutions will not issue a mortgage with a short lease

Whether or not the lease is be regarded as a short lease depends on the specific mortgage company, yet mortgage lenders start to get jittery at around 75 years. This will cause difficulties when you need to sell or remortgage your property as it will be practically unmortgageable. Even though you may not have an immediate desire to sell but when you do your purchaser will need to hold off for two years before being able to initiate the legal procedures for a lease extension.

Lender Requirement
Chelsea 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.
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.
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 you become aware that it does not meet these requirements, please refer to the Issuing Office

Why use us for your lease extension in Gilberdyke?

The conveyancing solicitors that we work with procure Gilberdyke 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 conveyancing solicitor we work with provide it.

Gilberdyke Lease Extension Case Summaries:

Lauren, Gilberdyke, East Yorkshire,

Off the back of protracted correspondence with the freeholder of her two bedroom apartment in Gilberdyke, Lauren started the lease extension process as the 80 year deadline was swiftly advancing. The legal work was concluded in October 2009. The freeholder’s fees were negotiated to slightly above 650 pounds.

Gilberdyke case:

In 2010 we were phoned by Dr A Thompson who, having completed a garden flat in Gilberdyke in August 2010. The question was if we could approximate the compensation to the landlord would likely be for a ninety year lease extension. Comparable flats in Gilberdyke with an extended lease were worth £248,000. The mid-range ground rent payable was £65 billed per annum. The lease concluded in 2087. Considering the 63 years as a residual term we estimated the premium to the landlord for the lease extension to be between £20,900 and £24,200 not including professional charges.

Gilberdyke case:

In 2013 we were approached by Mr and Mrs. S Davis who, having owned a first floor flat in Gilberdyke in April 2001. The dilemma was if we could estimate the compensation to the landlord could be to extend the lease by 90 years. Comparable residencies in Gilberdyke with 100 year plus lease were valued about £181,600. The mid-range ground rent payable was £55 invoiced annually. The lease terminated on 25 November 2076. Taking into account 52 years remaining we estimated the compensation to the freeholder to extend the lease to be between £30,400 and £35,200 not including legals.