The value of Manchester leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of extending the lease can increase substantially once the remaining term is less than eighty years
Leasehold properties in Manchester with more than 100 years remaining on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little to be gained by purchasing the freehold unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
The conveyancing solicitors 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.
Last October Archie, came perilously close to the 80-year mark with the lease on his ground floor flat in Manchester. Having purchased his flat two decades ago, the length of the lease was of minimal significance. by good luck, it dawned on him that he would soon be paying an escalated premium for a lease extension. Archie arranged for a lease extension just in the nick of time last September. Archie and the landlord who owned the flat above ultimately agreed on a premium of £6,000 . If he not met the deadline, the price would have increased by at least £1,150.
Last Autumn we were phoned by Mr and Mrs. W Morgan , who took over the lease of a ground floor apartment in Manchester in June 2004. We are asked if we could estimate the compensation to the landlord would be to extend the lease by a further 90 years. Comparative premises in Manchester with a long lease were valued about £218,000. The average amount of ground rent was £45 collected annually. The lease finished in 2089. Considering the 63 years unexpired we estimated the premium to the landlord for the lease extension to be within £17,100 and £19,800 exclusive of legals.
Dr M Sánchez bought a ground floor apartment in Manchester in March 2001. The question was if we could shed any light on how much (roughly) compensation to the landlord could be to prolong the lease by a further 90 years. Similar homes in Manchester with a long lease were valued around £270,000. The average amount of ground rent was £55 invoiced every twelve months. The lease came to a finish in 2100. Given that there were 74 years outstanding we approximated the premium to the freeholder for the lease extension to be within £9,500 and £11,000 plus expenses.