For anyone whose Harrold property is held on a long lease, the message is clear – if no remedial action is taken, the property will ultimately revert to the freeholder, leaving you empty-handed. The shorter the lease the less it is worth and the more it will cost to procure a lease extension.
It is conventional wisdom that a residential leasehold with over 100 years remaining is worth roughly the same as a freehold. Where an additional ninety years added to any lease with more than 30 years remaining, the residence will be equivalent in value to a freehold for many years in the future.
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Using our service gives you increased control over the value of your Harrold leasehold, as your property will be more valuable and marketable in relation to the lease length should you wish to sell. The conveyancing solicitors that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
During the course of the last few months Felix, came perilously near to the eighty-year mark with the lease on his ground floor apartment in Harrold. Having bought his property two decades ago, the unexpired term was of no significance. Thankfully, he realised he needed to take steps soon on a lease extension. Felix extended the lease just in the nick of time last May. Felix and the landlord who owned the flat above subsequently agreed on an amount of £5,000 . If the lease had slipped below eighty years, the figure would have gone up by a minimum £900.
Last Spring we were e-mailed by Mr and Mrs. D Davis , who moved into a purpose-built apartment in Harrold in February 2004. We are asked if we could estimate the price could be to prolong the lease by ninety years. Identical flats in Harrold with a long lease were in the region of £176,200. The average amount of ground rent was £65 billed annually. The lease elapsed in 2082. Having 56 years unexpired we calculated the compensation to the landlord to extend the lease to be within £29,500 and £34,000 exclusive of professional charges.
Last May we were approach by Dr I François , who took over the lease of a purpose-built flat in Harrold in July 2008. We are asked if we could estimate the compensation to the landlord would be to prolong the lease by ninety years. Similar residencies in Harrold with a long lease were in the region of £237,600. The average ground rent payable was £45 collected monthly. The lease expiry date was in 2093. Taking into account 67 years remaining we calculated the premium to the freeholder for the lease extension to be within £11,400 and £13,200 exclusive of professional charges.