Unfortunately that a Pitsea residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is taken for granted in the first few years due to the depreciation being disguised by increases in the Pitsea property prices.Once your lease nears 85ish years, you should start thinking about a lease extension. If lease term dips below eighty years, you will end up paying 50% of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. The marriage fee is the amount of additional value that a lease extension will add the property The majority of leasehold owners in Pitsea will be able to extend under the legislation; however a lawyer should be able to clarify whether you qualify for an extension. In some cases you may not qualify. There are also strict timeframes and procedures to follow once the process is instigated and you will need to be guided by your conveyancer throughout the formalities.
It is conventional wisdom that a residential leasehold with in excess of one hundred years remaining is worth roughly the equivalent as a freehold. Where an additional ninety years added to any lease with more than 35 years unexpired, the residence will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| 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. |
| Godiva Mortgages | A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with procure Pitsea 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 unsuccessful correspondence with the landlord of her garden flat in Pitsea, Francesca started the lease extension process as the 80 year deadline was quickly approaching. The transaction was concluded in January 2013. The freeholder’s costs were negotiated to about 450 GBP.
Last year we were called by Mr Alex Bonnet , who was assigned a lease of a studio flat in Pitsea in October 2003. We are asked if we could approximate the premium would be to prolong the lease by ninety years. Similar flats in Pitsea with an extended lease were valued about £285,000. The average ground rent payable was £45 collected per annum. The lease expired in 2097. Considering the 71 years unexpired we approximated the premium to the freeholder to extend the lease to be between £12,400 and £14,200 exclusive of expenses.
In 2010 we were e-mailed by Dr Melissa Baker who, having took over the lease of a ground floor flat in Pitsea in January 1999. The question was if we could estimate the compensation to the landlord could be to prolong the lease by a further 90 years. Similar premises in Pitsea with a long lease were worth £225,800. The average amount of ground rent was £60 billed monthly. The lease ran out in 2086. Given that there were 60 years remaining we estimated the compensation to the freeholder to extend the lease to be within £23,800 and £27,400 exclusive of costs.