The value of Grays leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of a lease extension can increase substantially once the unexpired lease term is less than eighty years
It is generally considered that a property with more than one hundred 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 residence will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| 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; |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| 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 |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Using our service will provide you increased control over the value of your Grays leasehold, as your property will be more valuable and saleable in respect of lease length should you want to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Ethan owned a studio apartment in Grays on the market with a lease of fraction over sixty years left. Ethan informally spoke with his landlord a well known Manchester-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years on the basis of a rise in the rent to £50 yearly. Ordinarily, ground rent would not be payable on a lease extension were Ethan to exercise his statutory right. Ethan procured expert legal guidance and was able to make an informed judgement and handle with the matter and sell the flat.
Last year we were called by Dr V Thompson , who acquired a studio apartment in Grays in July 2002. We are asked if we could shed any light on how much (approximately) premium would be to prolong the lease by an additional years. Similar properties in Grays with an extended lease were valued about £237,600. The mid-range amount of ground rent was £45 invoiced annually. The lease terminated in 2093. Taking into account 67 years unexpired we calculated the compensation to the landlord to extend the lease to be between £11,400 and £13,200 not including fees.
An example of a Lease Extension matter before the tribunal for a Grays premises is Various @ Colombus Square in January 2012. the Tribunal calculated the premiums to be paid for new leases for each of the flats in Mariners Walk to be £3822 and the premium to be paid for the new lease of 2 Knights Court to be £4439. This case was in relation to 13 flats. The unexpired term as at the valuation date was 76 years.