Penryn leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease gets more expensive. It is the case that most Penryn tenants have the right to extend their lease by an additional ninety years in accordance with the 1993 Leasehold Reform Act. Where you are a leasehold owner in Penryn you must investigate if your lease has between seventy and 90 years remaining. In particular once the remaining lease term slips under eighty years, the cost of any lease extension sharply increases as an element of the premium you pay is what is known as a marriage value
Leasehold premises in Penryn with more than one hundred years unexpired 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 property. In such situations there is often little to be gained by buying the freehold unless savings on ground rent and maintenance 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; |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with undertake Penryn 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.
After lengthy correspondence with the freeholder of her one bedroom flat in Penryn, Alisha started the lease extension process just as the lease was coming close to the critical eighty-year threshold. The transaction was concluded in February 2015. The landlord’s charges were restricted to approximately 600 GBP.
In 2013 we were approached by Mr J Norbert who, having purchased a first floor apartment in Penryn in October 2004. We are asked if we could estimate the compensation to the landlord would likely be for a ninety year lease extension. Identical residencies in Penryn with a long lease were valued about £183,600. The average ground rent payable was £65 invoiced yearly. The lease terminated in 2083. Considering the 57 years outstanding we calculated the premium to the freeholder for the lease extension to be between £28,500 and £33,000 plus professional charges.
Mr Jasper Green was assigned a lease of a basement apartment in Penryn in March 2010. We are asked if we could approximate the premium would likely be for a 90 year extension to my lease. Similar premises in Penryn with 100 year plus lease were valued around £245,000. The average ground rent payable was £50 billed every twelve months. The lease came to a finish on 11 February 2094. Given that there were 68 years remaining we estimated the compensation to the landlord for the lease extension to be between £9,500 and £11,000 exclusive of professional charges.