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Top reasons for Oldham lease extension


Top reasons for lease extension now:

Increase your lease and increase your Oldham property value

The market value of Oldham leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of a lease extension can escalate significantly once the remaining term is below than eighty years

Oldham property with a lease extension has roughly the same value as a freehold

Leasehold properties in Oldham with more than one hundred years left 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 situations there is often little to be gained by purchasing the freehold unless savings on ground rent and maintenance charges justify it.

Lenders may not loan monies on a short lease

Whether or not the lease is be regarded as a short lease varies by mortgage company, yet mortgage lenders start to become nervous at around 75 years. This will cause difficulties once you wish to dispose of or remortgage your property as it will be effectively unmortgageable. You may not have an immediate desire to sell but when you do your buyer will need to wait a couple of years before they can exercise the right to a an extension to the lease.

Lender Requirement
Bank of Scotland Minimum 70 years from the date of the mortgage.
Birmingham Midshires Minimum 70 years from the date of the mortgage.
Leeds Building Society 85 years remaining from the start of the mortgage.
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
Virgin 85 years at the time of completion. If it's less, we require it to be extended on or before completion.

What makes us experts in Oldham lease extensions?

Irrespective of whether you are a tenant or a freeholder in Oldham,the lease extension lawyers that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Oldham valuers.

Oldham Lease Extension Example Cases:

Melissa, Oldham, Greater Manchester,

In the wake of eight months of protracted correspondence with the landlord of her first floor apartment in Oldham, Melissa commenced the lease extension process as the eighty year deadline was fast coming. The legal work was finalised in January 2005. The freeholder’s costs were negotiated to approximately 700 pounds.

Oldham case:

Last Autumn we were approach by Mr and Mrs. I Norbert , who owned a one bedroom apartment in Oldham in October 2002. The question was if we could shed any light on how much (roughly) price could be to extend the lease by a further 90 years. Identical homes in Oldham with a long lease were in the region of £300,000. The mid-range amount of ground rent was £50 collected every twelve months. The lease expiry date was in 2099. Taking into account 75 years remaining we calculated the compensation to the freeholder to extend the lease to be between £9,500 and £11,000 exclusive of fees.

Oldham case:

Last Summer we were e-mailed by Dr Bethany Brown , who bought a purpose-built apartment in Oldham in April 1997. We are asked if we could approximate the premium would be to prolong the lease by ninety years. Comparable residencies in Oldham with a long lease were worth £250,400. The average ground rent payable was £65 invoiced every twelve months. The lease came to a finish on 7 August 2088. Taking into account 64 years as a residual term we calculated the compensation to the freeholder for the lease extension to be between £19,000 and £22,000 not including fees.