For those whose Penryn home is held on a long lease, our message is clear – if no remedial action is taken, the property will eventually revert to the freeholder, leaving you empty-handed. The fewer the years remaining the less it is worth and the more expensive it will be to extend the lease.
It is conventional wisdom that a property with in excess of 100 years remaining is worth roughly the same as a freehold. Where an additional ninety years added to all but the shortest lease, the premises will be equivalent in value to a freehold for decades to come.
| 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. |
| 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. |
Retaining our service gives you enhanced control over the value of your Penryn leasehold, as your property will be more valuable and saleable in terms of lease length should you want to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Eliot was the the leasehold owner of a 2 bedroom apartment in Penryn on the market with a lease of a few days over fifty eight years left. Eliot informally contacted his landlord a well known Bristol-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to extend the lease to 125 years subject to an increased rent to £125 annually. Ordinarily, ground rent would not be due on a lease extension were Eliot to invoke his statutory right. Eliot procured expert advice and secured satisfactory deal informally and sell the flat.
Last month we were e-mailed by Mr and Mrs. F Wilson , who took over the lease of a basement apartment in Penryn in August 2006. The dilemma was if we could approximate the price would be to extend the lease by an additional years. Similar flats in Penryn with a long lease were worth £260,000. The average ground rent payable was £50 collected quarterly. The lease elapsed in 2098. Given that there were 72 years unexpired we calculated the premium to the landlord for the lease extension to be within £9,500 and £11,000 plus fees.
Mrs W Gómez bought a one bedroom apartment in Penryn in May 2007. We are asked if we could approximate the compensation to the landlord could be to extend the lease by an additional years. Comparative premises in Penryn with 100 year plus lease were in the region of £256,600. The mid-range ground rent payable was £60 billed per annum. The lease expired in 2078. Taking into account 52 years left we approximated the premium to the freeholder for the lease extension to be within £39,000 and £45,000 not including professional charges.