There is no doubt about it a leasehold flat or house in Kempston is a wasting asset as a result of the shortening lease. Where the residual term has, beyond 125 years to run then this decrease may be negligible however there will become a point in time when a lease has under than eighty years remaining as part of the premium you will incur is what is known as a marriage value. This could be significant. It is the main reason why you should consider extending sooner than later. The majority of flat owners in Kempston will qualify for this right; however a lawyer will be able to confirm if you are eligible for a lease extension. In limited situations you may not qualify, the most frequent reason being that you have owned the property for under two years.
It is conventional wisdom that a property with in excess of one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the residence will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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. |
| National Westminster Bank | Mortgage term plus 30 years. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Retaining our service will provide you enhanced control over the value of your Kempston leasehold, as your property will be more valuable and marketable in relation to the lease length should you want to sell. The conveyancers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Last year Dylan, started to get near to the eighty-year mark with the lease on his studio apartment in Kempston. In buying his property 19 years ago, the lease term was of little interest. Thankfully, he became aware that he needed to take action soon on a lease extension. Dylan was able to extend his lease just in the nick of time last January. Dylan and the freeholder eventually agreed on the final figure of £5,000 . If the lease had slipped below eighty years, the sum would have gone up by a minimum £1,075.
Last month we were e-mailed by Mr and Mrs. V Hernández , who acquired a garden apartment in Kempston in November 1995. The dilemma was if we could estimate the price would be for a 90 year extension to my lease. Identical homes in Kempston with an extended lease were valued about £233,200. The average amount of ground rent was £60 collected every twelve months. The lease elapsed on 23 November 2086. Taking into account 61 years outstanding we approximated the premium to the freeholder for the lease extension to be within £22,800 and £26,400 not including legals.
In 2011 we were e-mailed by Dr Laura Cook who, having owned a first floor flat in Kempston in September 1999. The question was if we could approximate the premium would likely be for a ninety year extension to my lease. Comparable premises in Kempston with 100 year plus lease were worth £171,800. The average ground rent payable was £55 collected per annum. The lease concluded in 2075. Having 50 years remaining we approximated the compensation to the freeholder to extend the lease to be between £33,300 and £38,400 plus expenses.