If you are facing a significant premium because your lease in Harrold has dropped toward the 80-year mark, your previous lawyer may be at fault. Our panel of experts specialise in recovering lease extension costs from negligent firms who failed to protect your investment.
Main reasons to start your Harrold lease extension today:
Increase your lease and increase your Harrold property value
Owning a flat usually means owning a lease of the property, which has a set term of years. The lease will usually be granted for a prescribed period of time , usually 99 or 125 years, although we have witnessed longer and shorter terms in Harrold. Clearly, the term of lease remaining shortens over time. This is often ignored and only becomes a problem when the residence has to be disposed of or re-mortgaged. The fewer the years remaining the lower the value of the property and the more expensive it will be to procure a lease extension. Eligible leaseholders in Harrold have the right to extend the lease for a further ninety years in accordance with legislation. Do give careful deliberation before delaying your Harrold lease extension. Putting off that expense now only increases the price you will eventually incur to extend your lease
Harrold property with a lease extension has roughly the same value as a freehold
Leasehold residencies in Harrold with over 100 years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and maintenance charges merit it.
Lending institutions may not grant a mortgage with a short lease
Banks and Building Societies have specific criteria when lending monies charged on leasehold homes. Many will simply refuse lend at all once the residual lease term drops beneath a certain unexpired lease term. Many Banks and Building Societies will not consider property with a remaining term of less than 75 years suitable security. In addition to this being important when selling, it is also relevant if you are seeking to remortgage your Harrold property.
| Lender |
Requirement
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|---|
| 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.
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| Bank of Scotland |
Minimum 70 years from the date of the mortgage.
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| Halifax |
Minimum 70 years from the date of the mortgage.
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| Nationwide Building Society |
- Our minimum unexpired lease term is 55 years, except where lending is over 85% of the purchase price/valuation on a second hand flat, in which case our minimum unexpired term is 90 years.
- There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start).
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
- Where lending is over 85% of the purchase price/valuation on a second hand flat and the unexpired lease term on the offer is 90 years or more - only advise us if the actual lease term is less than 90 years.
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 55 years
- Unexpired lease term less than 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat
- 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 is 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 55 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% 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 (Minimum 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat)
- 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 (does not apply to Shared Ownership)
- 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 charged which is more than on a peppercorn basis
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% 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 a proposed Lease Extension does not meet these requirements, however you feel that this is in the best interest for our mutual client, please refer all details to the Issuing Office for us to consider.
Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning.
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| 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
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Get in touch with one of our Harrold lease extension solicitors or enfranchisement solicitors
Regardless of whether you are a tenant or a freeholder in Harrold,the lease extension solicitors 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 Harrold valuers.
Harrold Lease Extension Case Studies:
George, Harrold, Bedfordshire
Last year George, came seriously near to the 80-year mark with the lease on his first floor flat in Harrold. Having purchased his property 18 years previously, the length of the lease was of minimal bearing. Luckily, he realised he would soon be paying way over the odds for a lease extension. George arranged for a lease extension just ahead of time in July. George and the landlord who owned the flat above ultimately agreed on the final figure of £5,500 . If the lease had gone to less than eighty years, the price would have increased by at least £950.
Harrold case:
Last Summer we were e-mailed by Mrs W Carter , who
was assigned a lease of a newly refurbished apartment in Harrold in February 1995. We are asked if we could shed any light on how much (approximately) premium would likely be to prolong the lease by a further 90 years. Identical premises in Harrold with a long lease were valued about £280,000. The mid-range amount of ground rent was £55 billed annually. The lease concluded on 8 September 2105. Given that there were 79 years remaining we approximated the compensation to the landlord for the lease extension to be within £12,400 and £14,200 exclusive of professional charges.
Harrold case:
In 2009 we were phoned by Mr and Mrs. E López who, having took over the lease of a first floor apartment in Harrold in October 1997. The question was if we could estimate the compensation to the landlord would be to prolong the lease by 90 years. Identical homes in Harrold with a long lease were worth £193,400. The average ground rent payable was £65 invoiced annually. The lease concluded in 2085. Considering the 59 years unexpired we approximated the premium to the freeholder for the lease extension to be between £21,900 and £25,200 not including expenses.