Owning a flat usually means owning a lease of the property, which has a finite term of years. This lease will normally be granted for a fixed period of time , usually 99 or 125 years, although we have come across longer and shorter terms in Manchester. Clearly, the length of lease remaining reduces as time goes by. This is often overlooked and only becomes a problem when the residence has to be disposed of or refinanced. The fewer the years remaining the less it is worth and the more it will cost to obtain a lease extension. Eligible long lease owners in Manchester have the legal entitlement to extend the lease for a further ninety years under the 1993 Leasehold Reform Act. Do give due consideration before delaying your Manchester lease extension. Holding off that expense now only increases the price you will ultimately have to pay for a lease extension
Leasehold premises in Manchester with more than 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 premises. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Godiva Mortgages | A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The lawyers that we work with handle Manchester 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.
Michael was the the leasehold owner of a high value flat in Manchester being sold with a lease of fraction over 59 years unexpired. Michael informally contacted his freeholder a well known Bristol-based freehold company for a lease extension. The landlord was prepared to give an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent at the outset set at £100 per annum and doubled every 25 years thereafter. No ground rent would be due on a lease extension were Michael to exercise his statutory right. Michael obtained expert legal guidance and was able to make a more informed decision and handle with the matter and ending up with a market value flat.
In 2013 we were phoned by Dr W Girard who, having owned a first floor flat in Manchester in April 2004. The dilemma was if we could estimate the price would be for a 90 year lease extension. Comparable residencies in Manchester with 100 year plus lease were valued around £242,600. The average ground rent payable was £45 billed monthly. The lease concluded in 2093. Given that there were 67 years as a residual term we calculated the compensation to the landlord for the lease extension to be between £11,400 and £13,200 exclusive of fees.
Last Winter we were called by Mr Jake Murphy , who completed a one bedroom apartment in Manchester in August 2006. The question was if we could estimate the price would be for a 90 year extension to my lease. Comparable homes in Manchester with 100 year plus lease were worth £280,000. The mid-range amount of ground rent was £55 invoiced per annum. The lease came to a finish in 2104. Having 78 years left we approximated the premium to the freeholder to extend the lease to be within £13,300 and £15,400 exclusive of costs.