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Top reasons for Lydney lease extension


Why you should start your Lydney lease extension today:

A Lydney leasehold property depreciates with the years remaining on the lease.

The only way is down when it comes to Lydney lease terms. Lydney flats that have a residual term fewer than 80 years will reduce in value even faster, and the cost of extending your lease will go up.

An extended lease has roughly the same value as a freehold

It is conventional wisdom that a residential leasehold with over 100 years unexpired lease term is worth approximately the same as a freehold. Where an further ninety years added to all but the shortest lease, the residence will be worth the same as a freehold for decades to come.

Lenders may not lend on a short lease

Nearly all mortgage lenders require a lengthy amount of time remaining on a leasehold residence before they will contemplate providing a mortgage on it. Even if you don't need a mortgage, you should keep in mind that it is reasonable to assume that someone intending to acquire your property in the future might well do, so in the event that they are not able to secure a mortgage, then the market price of your property could suffer. In the last decade the majority of banks and building societies have increased the required minimum lease length that they are prepared to lend on

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;
Lloyds TSB Scotland Minimum 70 years from the date of the mortgage.
National Westminster Bank Mortgage term plus 30 years.
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
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges

For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years

LEASE EXTENSIONS

We require all lease extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to the Issuing Office

Why use us for your lease extension in Lydney?

The conveyancers that we work with undertake Lydney 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.

Lydney Lease Extension Case Summaries:

George, Lydney, Gloucestershire

Two years ago George, came dangerously near to the eighty-year mark with the lease on his two bedroom apartment in Lydney. Having bought his flat two decades ago, the length of the lease was of minimal bearing. As luck would have it, it dawned on him that he needed to take steps soon on a lease extension. George arranged for a lease extension at the eleventh hour last June. George and the freeholder via the managing agents eventually agreed on the final figure of £5,000 . If the lease had dipped to less than eighty years, the premium would have become more costly by at least £1,075.

Lydney case:

In 2013 we were phoned by Mr and Mrs. J Bell who, having moved into a purpose-built apartment in Lydney in May 2005. The dilemma was if we could approximate the compensation to the landlord would likely be for a ninety year extension to my lease. Similar premises in Lydney with an extended lease were in the region of £280,000. The average amount of ground rent was £45 collected quarterly. The lease terminated on 18 January 2094. Having 70 years as a residual term we calculated the premium to the freeholder for the lease extension to be within £12,400 and £14,200 plus expenses.

Lydney case:

Mr and Mrs. H Laurent bought a basement apartment in Lydney in July 2006. The dilemma was if we could estimate the compensation to the landlord would be to extend the lease by ninety years. Comparative flats in Lydney with a long lease were valued about £218,400. The average ground rent payable was £60 billed annually. The lease ended on 23 August 2083. Given that there were 59 years outstanding we approximated the premium to the landlord for the lease extension to be between £27,600 and £31,800 not including expenses.