It’s a harsh certainty that a Llanarth residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is taken for granted in the first few years due to the reduction being disguised by increases in the Llanarth property market.Where your lease has approximately ninety years left, you need to start thinking about 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 dips lower than 80 years - otherwise a higher amount will be payable. The majority of flat owners in Llanarth will be able to extend under the legislation; however a conveyancer should be able to clarify whether you are eligibility. In some situations you may not qualify. There are also strict deadlines and procedures to follow once the process has commenced and you will need to be guided by your lawyer throughout the formalities.
Leasehold properties in Llanarth with in excess of one hundred years remaining on the lease are often referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and estate charges merit it.
| 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; |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
Using our service gives you enhanced control over the value of your Llanarth leasehold, as your property will be more valuable and marketable in respect of lease length should you want to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Kyle owned a 2 bedroom flat in Llanarth being sold with a lease of a little over 72 years left. Kyle informally approached his landlord a well known Manchester-based freehold company and enquired on a premium to extend the lease. The landlord was prepared to grant an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £100 per annum. No ground rent would be due on a lease extension were Kyle to exercise his statutory right. Kyle procured expert advice and was able to make an informed judgement and handle with the matter and ending up with a market value flat.
Last Autumn we were phoned by Dr Kai Stewart , who moved into a studio flat in Llanarth in May 1999. The question was if we could shed any light on how much (roughly) premium could be for a ninety year extension to my lease. Comparative flats in Llanarth with a long lease were valued around £208,200. The mid-range amount of ground rent was £65 collected quarterly. The lease ended on 5 May 2086. Having 61 years as a residual term we calculated the compensation to the freeholder to extend the lease to be within £19,000 and £22,000 plus fees.
Dr Oliver Stewart moved into a basement flat in Llanarth in October 1996. We are asked if we could estimate the premium could be for a 90 year lease extension. Comparative flats in Llanarth with an extended lease were valued around £260,000. The average amount of ground rent was £50 collected annually. The lease ended in 2097. Given that there were 72 years as a residual term we calculated the premium to the freeholder for the lease extension to be between £9,500 and £11,000 exclusive of professional charges.