The market value of a leasehold property in Heath depends on how many years the lease has remaining. If it is near to or less than 80 years you should envisage difficulties on re-sale, so it is recommended to arrange for a lease extension prior to purchasing. Ideally one should start the lease extension process when a lease still has 82 years to run so that formalities can be finalised well before the eighty year mark. Current legislation enables Heath qualifying lessees to acquire a new lease which will be for the balance of the existing lease plus an additional term of 90 years. The intention of the valuation is to arrive at an opinion of the sum payable by the lessee to the freeholder for the purchase of the lease extension.
Leasehold properties in Heath with in excess of one hundred years outstanding on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little upside in buying the freehold unless savings on ground rent and maintenance charges justify it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| 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. |
| 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. |
The conveyancing solicitors that we work with undertake Heath 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 lawyer we work with provide it.
Off the back of lengthy discussions with the freeholder of her ground floor apartment in Heath, Chelsea started the lease extension process as the eighty year mark was rapidly nearing. The legal work was concluded in June 2007. The freeholder’s charges were restricted to under 550 pounds.
In 2012 we were phoned by Mr and Mrs. B Davis who, having bought a first floor flat in Heath in April 2010. The question was if we could estimate the compensation to the landlord would likely be to prolong the lease by 90 years. Identical homes in Heath with 100 year plus lease were worth £200,000. The mid-range amount of ground rent was £50 collected per annum. The lease elapsed on 20 February 2104. Taking into account 78 years remaining we approximated the compensation to the freeholder for the lease extension to be within £8,600 and £9,800 plus fees.
Mr and Mrs. V Rogers bought a garden apartment in Heath in October 2000. The dilemma was if we could approximate the premium could be to extend the lease by an additional years. Comparative premises in Heath with a long lease were in the region of £267,600. The mid-range amount of ground rent was £65 invoiced every twelve months. The lease concluded on 20 May 2093. Having 67 years outstanding we calculated the compensation to the landlord to extend the lease to be between £14,300 and £16,400 plus legals.