Parkstone leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease gets more expensive. The majority of owners of residential leasehold property in Parkstone enjoy rights under legislation to extend the terms of their leases. If you are a leasehold owner in Parkstone you would be well advised to check if your lease has between seventy and ninety years remaining. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension increases dramatically as part of the premium you pay is what is known as a marriage value
Leasehold residencies in Parkstone with more than 100 years unexpired on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little upside in buying the freehold unless savings on ground rent and estate charges justify 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. |
| 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. |
| 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. |
| Yorkshire 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. |
The conveyancers that we work with handle Parkstone 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.
Max owned a high value apartment in Parkstone on the market with a lease of just over 72 years remaining. Max on an informal basis contacted his landlord being a well known Bristol-based freehold company for a lease extension. The freeholder was keen to agree an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent to start with set at £200 per annum and doubled every 25 years thereafter. No ground rent would be payable on a lease extension were Max to exercise his statutory right. Max procured expert advice and was able to make a more informed judgement and handle with the matter and readily saleable.
Last Spring we were phoned by Ms V Garcia , who acquired a studio flat in Parkstone in October 2000. We are asked if we could estimate the price would be for a 90 year extension to my lease. Comparable residencies in Parkstone with an extended lease were valued around £191,000. The average amount of ground rent was £65 billed yearly. The lease expired on 6 October 2084. Having 58 years as a residual term we approximated the premium to the landlord to extend the lease to be between £23,800 and £27,400 not including expenses.
In 2012 we were called by Dr Edward Cook who, having acquired a purpose-built flat in Parkstone in February 2012. We are asked if we could approximate the compensation to the landlord would likely be for a 90 year lease extension. Comparative residencies in Parkstone with 100 year plus lease were valued about £250,000. The mid-range ground rent payable was £50 billed yearly. The lease terminated on 7 May 2095. Having 69 years outstanding we estimated the compensation to the landlord to extend the lease to be between £9,500 and £11,000 exclusive of costs.