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Why you should start your Lymm lease extension


Main reasons to commence your Lymm lease extension today:

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

Lymm leases on domestic properties are gradually losing value. Where your lease has approximately 90 years left, you should start thinking about a lease extension. 80 years is a significant number: when the unexpired term of a lease drops below this level then you start paying an additional element called marriage value. Leasehold owners in Lymm will usually qualify for a lease extension; however it’s a good idea to check with a lawyer to check your eligibility. In some situations you may not qualify. There are prescribed deadlines and procedures to comply with once the process is triggered so it’s sensible to be guided by a conveyancer during the process.

An extended lease is almost the same value as a freehold

Leasehold premises in Lymm with in excess of one hundred years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and maintenance charges warrant it.

Lenders will not loan monies on a short lease

Most high street banks are making their criteria more stringent and a meaningful number now require flats to have at least 60 if not 70 years remaining once the mortgage has expired. Given that a number of flats in Lymm were created in the fifties, sixties and seventies as a result many now need to be extended if they if they are to be mortgageable.

Lender Requirement
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.
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
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

What makes us experts in Lymm lease extensions?

The conveyancers that we work with handle Lymm 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.

Lymm Lease Extension Case Studies:

Connor, Lymm, Cheshire,

Connor owned a studio apartment in Lymm being marketed with a lease of a little over 61 years unexpired. Connor informally approached his freeholder a well known London-based freehold company and enquired on a premium to extend the lease. The landlord was prepared to agree an extension on non-statutory terms taking the lease to 125 years subject to a new rent to start with set at £100 per annum and increase every twenty five years thereafter. No ground rent would be due on a lease extension were Connor to exercise his statutory right. Connor obtained expert legal guidance and secured an acceptable resolution without going to tribunal and ending up with a market value flat.

Lymm case:

Mrs B Bennett acquired a first floor flat in Lymm in November 2008. The question was if we could shed any light on how much (roughly) premium would likely be for a 90 year lease extension. Comparable flats in Lymm with an extended lease were in the region of £256,600. The mid-range ground rent payable was £60 collected annually. The lease came to a finish on 4 October 2076. Having 52 years outstanding we calculated the premium to the landlord for the lease extension to be within £41,800 and £48,400 not including professional charges.

Lymm case:

Dr Muhammad Johnson owned a first floor apartment in Lymm in April 2002. We are asked if we could shed any light on how much (approximately) compensation to the landlord would likely be for a ninety year lease extension. Similar flats in Lymm with an extended lease were in the region of £218,000. The mid-range amount of ground rent was £45 invoiced every twelve months. The lease terminated on 15 January 2087. Considering the 63 years outstanding we estimated the premium to the landlord to extend the lease to be within £17,100 and £19,800 not including costs.