It’s an underpublicised certainty that a Harrold residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the early years due to the loss of value being disguised by increases in the Harrold property prices.Where your lease has approximately ninety years left, you need to start thinking about a lease extension. If lease term dips below 80 years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property The majority of flat owners in Harrold will be able to extend under the legislation; however a conveyancer should be able to clarify whether you qualify for an extension. In some cases 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 conveyancer from beginning to end of the process.
It is conventional wisdom that a residential leasehold with in excess of 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an further ninety years added to any lease with more than 30 years remaining, the property will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Godiva Mortgages | A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The lawyers that we work with handle Harrold 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 conveyancer we work with provide it.
Last October Eli, came very near to the 80-year threshold with the lease on his ground floor flat in Harrold. In buying his property 19 years ago, the unexpired term was of no concern. Thankfully, it dawned on him that he would imminently be paying way over the odds for a lease extension. Eli arranged for a lease extension just under the wire in July. Eli and the freeholder in the end settled on the final figure of £5,000 . If he had missed the deadline, the sum would have increased by at least £1,000.
In 2012 we were called by Mr V Lambert who, having was assigned a lease of a newly refurbished apartment in Harrold in June 2007. The question was if we could approximate the compensation to the landlord could be for a ninety year extension to my lease. Comparative premises in Harrold with 100 year plus lease were valued around £260,000. The mid-range ground rent payable was £50 invoiced monthly. The lease terminated on 2 November 2099. Given that there were 73 years as a residual term we approximated the premium to the landlord for the lease extension to be between £9,500 and £11,000 exclusive of professional charges.
In 2009 we were called by Dr O Evans who, having owned a garden apartment in Harrold in May 2000. We are asked if we could estimate the premium could be for a 90 year extension to my lease. Identical homes in Harrold with a long lease were in the region of £264,000. The mid-range ground rent payable was £60 collected quarterly. The lease came to a finish on 27 September 2079. Given that there were 53 years as a residual term we calculated the premium to the landlord to extend the lease to be within £37,100 and £42,800 exclusive of fees.