Unfortunately that a Irlam 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 Irlam property market.Once your lease gets to 85ish years, you should start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips under 80 years - otherwise a higher premium will be payable. Most flat owners in Irlam will be able to extend under the legislation; however a conveyancer will be able to clarify whether you qualify for an extension. In some situations you may not be entitled. There are also strict timetables and procedures to follow once the process is instigated and you will need to be guided by your lawyer from beginning to end of the formalities.
Leasehold residencies in Irlam with over 100 years outstanding 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 home. In such situations there is often little to be gained by buying 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Birmingham Midshires | Minimum 70 years from the date 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 conveyancing solicitors that we work with handle Irlam 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.
After unsuccessful negotiations with the landlord of her purpose-built flat in Irlam, Amber commenced the lease extension process as the eighty year mark was quickly approaching. The lease extension was concluded in March 2005. The freeholder’s charges were restricted to under 700 pounds.
Last November we were approach by Mr V Gray , who bought a newly refurbished apartment in Irlam in March 1998. The dilemma was if we could approximate the premium would likely be for a 90 year extension to my lease. Identical flats in Irlam with 100 year plus lease were valued about £256,600. The mid-range amount of ground rent was £60 invoiced monthly. The lease concluded in 2078. Given that there were 52 years as a residual term we calculated the compensation to the freeholder for the lease extension to be within £39,000 and £45,000 plus costs.
Dr K Bailey completed a one bedroom flat in Irlam in September 1996. We are asked if we could estimate the premium would be to prolong the lease by a further 90 years. Similar residencies in Irlam with 100 year plus lease were in the region of £218,000. The average amount of ground rent was £45 invoiced monthly. The lease termination date was in 2089. Considering the 63 years outstanding we estimated the premium to the freeholder for the lease extension to be within £17,100 and £19,800 exclusive of expenses.