For anyone whose Henbury flat is held on a long lease, the message is clear – if no remedial action is taken, the property will ultimately revert to your landlord, leaving you empty-handed. The shorter the lease the lower the value of the property and the more expensive it will be to obtain a lease extension.
Leasehold premises in Henbury with in excess of one hundred years unexpired on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and service charges merit 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. |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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. |
Retaining our service will provide you better control over the value of your Henbury leasehold, as your property will be more valuable and marketable in relation to the lease length should you want 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.
Trailing lengthy negotiations with the landlord of her ground floor flat in Henbury, Kirsty started the lease extension process just as the lease was nearing the crucial eighty-year threshold. The transaction was finalised in July 2007. The freeholder’s charges were kept to an absolute minimum.
In 2012 we were called by Dr Finley Laurent who, having purchased a ground floor apartment in Henbury in February 1999. We are asked if we could approximate the price could be to prolong the lease by 90 years. Similar flats in Henbury with a long lease were in the region of £205,000. The mid-range ground rent payable was £50 collected every twelve months. The lease terminated on 13 May 2103. Having 78 years unexpired we approximated the premium to the landlord for the lease extension to be between £7,600 and £8,800 plus professional charges.
In 2011 we were approached by Mr N Ali who, having moved into a one bedroom flat in Henbury in July 1998. The question was if we could estimate the price would likely be to prolong the lease by ninety years. Comparative properties in Henbury with a long lease were in the region of £267,600. The mid-range amount of ground rent was £65 billed every twelve months. The lease elapsed in 2092. Taking into account 67 years as a residual term we approximated the compensation to the freeholder for the lease extension to be between £14,300 and £16,400 plus professional charges.