The re-sale value of a leasehold property in Poundbury depends on how long the lease has remaining. If it is near to or less than eighty years you should expect problems on re-sale, so it is recommended to arrange for the lease to be extended prior to purchasing. It is ideal to start the lease extension process when a lease still has 82 years to run so that all matters can be concluded ahead of the 80 year mark. Current legislation enables Poundbury qualifying lessees to acquire a lease extension of 90 years on top of the remaining length of the lease at a peppercorn rent (that is, rent free). The intention of the valuation is to arrive at an opinion of the premium payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold premises in Poundbury with over one hundred years remaining on the lease are sometimes regarded as a ‘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 estate charges justify it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Coventry Building Society | 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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. |
Retaining our service gives you increased control over the value of your Poundbury leasehold, as your property will be more valuable and saleable in relation to the lease length should you decide to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Off the back of protracted discussions with the freeholder of her first floor flat in Poundbury, Jasmine started the lease extension process just as the lease was nearing the crucial eighty-year deadline. The transaction completed in February 2009. The landlord’s costs were kept to an absolute minimum.
Last Christmas we were phoned by Ms Hollie Garcia , who was assigned a lease of a one bedroom flat in Poundbury in November 2005. The question was if we could shed any light on how much (approximately) price could be for a ninety year lease extension. Identical properties in Poundbury with 100 year plus lease were worth £300,000. The mid-range amount of ground rent was £50 billed annually. The lease finished in 2101. Considering the 76 years left we calculated the compensation to the freeholder for the lease extension to be within £8,600 and £9,800 not including legals.
In 2014 we were approached by Dr Theo López who, having acquired a recently refurbished apartment in Poundbury in September 2004. The question was if we could shed any light on how much (roughly) premium would be for a ninety year extension to my lease. Comparative residencies in Poundbury with 100 year plus lease were worth £257,800. The average amount of ground rent was £65 collected annually. The lease came to a finish on 5 November 2090. Taking into account 65 years as a residual term we estimated the premium to the landlord for the lease extension to be within £18,100 and £20,800 plus professional charges.