Poundbury leases on domestic properties are gradually losing value. if your lease has in the region of 90 years unexpired, you should start thinking about a lease extension. If lease term is under eighty years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to your landlord. Marriage value is the amount of extra value that a lease extension will add to the property. Flat owners in Poundbury will mostly be legally entitled to a lease extension; however It would be wise to check with a conveyancer to check your eligibility. In certain cases you may not qualify. There are also strict timetables and procedures to follow once the process is initiated so it’s wise to be guided by a conveyancing solicitor during the process.
Leasehold properties in Poundbury with more than one hundred years left on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and maintenance charges justify it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
The lawyers that we work with undertake Poundbury 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 conveyancing solicitor we work with provide it.
Andrew owned a 2 bedroom apartment in Poundbury being sold with a lease of fraction over 59 years left. Andrew on an informal basis approached his freeholder being a well known London-based freehold company and enquired on a premium to extend the lease. The landlord was keen to give an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £100 annually. Ordinarily, ground rent would not be due on a lease extension were Andrew to invoke his statutory right. Andrew procured expert advice and secured satisfactory resolution informally and readily saleable.
Last January we were e-mailed by Mrs Madeleine Patel , who owned a basement apartment in Poundbury in May 1997. We are asked if we could approximate the premium would likely be to extend the lease by a further 90 years. Comparable properties in Poundbury with 100 year plus lease were worth £250,400. The mid-range ground rent payable was £65 invoiced every twelve months. The lease terminated on 12 March 2089. Considering the 64 years unexpired we calculated the compensation to the landlord to extend the lease to be within £19,000 and £22,000 plus legals.
Last March we were e-mailed by Mr and Mrs. M Davies , who completed a one bedroom apartment in Poundbury in March 2006. The question was if we could estimate the premium could be to prolong the lease by an additional years. Identical homes in Poundbury with an extended lease were worth £189,000. The mid-range ground rent payable was £55 collected yearly. The lease expired in 2078. Taking into account 53 years unexpired we approximated the premium to the landlord to extend the lease to be between £28,500 and £33,000 plus expenses.