It’s an underpublicised certainty that a Greenfield residential lease is a deteriorating asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the first few years due to the reduction being disguised by increases in the Greenfield property market.Where your lease has approximately ninety years left, 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 falls under eighty years - otherwise a higher amount will be due. Most flat owners in Greenfield will be able to extend under the legislation; however a conveyancing solicitor should be able to clarify if you qualify for an extension. In some cases you may not be entitled. There are also strict timetables and procedures to follow once the process is instigated and you will need to be guided by your conveyancing solicitor for the duration of the process.
It is conventional wisdom that a property with in excess of one hundred years unexpired lease term is worth approximately the same as a freehold. Where an further 90 years added to all but the shortest lease, the property 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 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; |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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. |
Irrespective of whether you are a tenant or a landlord in Greenfield,the lease extension experts that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Greenfield valuers.
Jasper was the the leasehold proprietor of a studio apartment in Greenfield being sold with a lease of a few days over 59 years remaining. Jasper on an informal basis approached his freeholder a well known Manchester-based freehold company and enquired on a premium to extend the lease. The landlord was keen to agree an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £50 yearly. No ground rent would be payable on a lease extension were Jasper to exercise his statutory right. Jasper obtained expert advice and was able to make a more informed judgement and deal with the matter and sell the flat.
Mr and Mrs. U Laurent was assigned a lease of a purpose-built apartment in Greenfield in July 2012. The dilemma was if we could shed any light on how much (roughly) premium would likely be to prolong the lease by a further 90 years. Comparable flats in Greenfield with an extended lease were worth £270,000. The mid-range ground rent payable was £55 collected per annum. The lease expiry date was in 2100. Given that there were 75 years as a residual term we approximated the premium to the freeholder for the lease extension to be between £9,500 and £11,000 not including fees.
Last Winter we were phoned by Dr M Torres , who completed a ground floor apartment in Greenfield in February 2009. We are asked if we could shed any light on how much (approximately) compensation to the landlord would likely be to prolong the lease by ninety years. Comparable residencies in Greenfield with 100 year plus lease were in the region of £168,800. The average amount of ground rent was £60 collected yearly. The lease terminated in 2080. Considering the 55 years unexpired we estimated the premium to the landlord for the lease extension to be between £31,400 and £36,200 not including costs.