It’s an underpublicised certainty that a Greenfield residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the deflation being disguised by increases in the Greenfield property market.Once your lease nears 85ish years, you need to start thinking about 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 dips below 80 years - otherwise a higher amount will be due. The majority of leasehold 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 situations you may not qualify. There are also strict timeframes and procedures to follow once the process has commenced and you will need to be guided by your lawyer from beginning to end of the formalities.
Leasehold residencies in Greenfield with in excess of 100 years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and maintenance charges justify it.
| 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. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| 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 conveyancing solicitors that we work with handle Greenfield 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.
Noah was the the leasehold proprietor of a high value apartment in Greenfield on the market with a lease of a little over 61 years outstanding. Noah on an informal basis approached his freeholder being a well known local-based freehold company and enquired on a premium to extend the lease. The freeholder was prepared to agree an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £200 per annum and doubled every twenty five years thereafter. No ground rent would be due on a lease extension were Noah to invoke his statutory right. Noah procured expert legal guidance and was able to make a more informed judgement and deal with the matter and sell the flat.
Last year we were e-mailed by Dr M Peterson , who owned a one bedroom flat in Greenfield in October 2008. The dilemma was if we could estimate the compensation to the landlord could be to extend the lease by ninety years. Identical flats in Greenfield with a long lease were in the region of £264,000. The mid-range amount of ground rent was £60 invoiced quarterly. The lease came to a finish in 2078. Given that there were 53 years remaining we approximated the compensation to the landlord for the lease extension to be within £37,100 and £42,800 plus expenses.
Ms I Morgan acquired a purpose-built flat in Greenfield in October 2008. The dilemma was if we could estimate the premium could be to prolong the lease by a further 90 years. Similar premises in Greenfield with 100 year plus lease were in the region of £225,400. The mid-range amount of ground rent was £45 billed every twelve months. The lease end date was on 15 August 2089. Considering the 64 years unexpired we estimated the compensation to the freeholder for the lease extension to be between £16,200 and £18,600 plus expenses.