There is no doubt about it a leasehold property in Rhiwbina is a wasting asset as a result of the shortening lease. If the residual term has, in excess of one hundred years to run then this decrease may be negligible however there will become a stage when a lease has fewer than 80 years unexpired as part of the premium you will incur is what is known as a marriage value. This could be significant. It is the main rational as to why you should extend the lease sooner rather than later. The majority of flat owners in Rhiwbina will meet the qualifying criteria; however a conveyancer should be able to advise whether you are eligible for a lease extension. In limited situations you may not qualify, the most common reason being that you have owned the property for under two years.
It is generally accepted that a residential leasehold with in excess of 100 years unexpired lease term is worth roughly the same as a freehold. Where an further ninety years added to all but the shortest lease, the residence will be worth the same as a freehold for many years in the future.
| 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. |
| Santander | If the property is leasehold, the remaining unexpired lease term at the end of the new mortgage term must be at least 50 years where any part of the mortgage is on Interest Only and 30 years if all loan parts are on Capital Repayment and Interest. You must report the unexpired lease term to us and await our instructions if:
|
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Retaining our service will provide you better control over the value of your Rhiwbina leasehold, as your property will be more valuable and saleable in terms of 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.
Benjamin was the the leasehold owner of a conversion flat in Rhiwbina being sold with a lease of just over fifty eight years remaining. Benjamin on an informal basis contacted his landlord being a well known local-based freehold company for a lease extension. The freeholder was keen to grant an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £100 per annum and increase every twenty five years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Benjamin to invoke his statutory right. Benjamin procured expert advice and secured an acceptable deal without going to tribunal and readily saleable.
In 2009 we were e-mailed by Dr W Watson who, having purchased a garden apartment in Rhiwbina in August 2008. The question was if we could estimate the premium could be to extend the lease by ninety years. Comparable premises in Rhiwbina with an extended lease were worth £290,000. The average amount of ground rent was £45 invoiced annually. The lease ended on 15 May 2099. Having 73 years unexpired we estimated the compensation to the freeholder to extend the lease to be between £9,500 and £11,000 exclusive of costs.
Last June we were phoned by Mr and Mrs. P Thomas , who bought a studio flat in Rhiwbina in August 1995. The question was if we could approximate the premium could be for a 90 year lease extension. Similar residencies in Rhiwbina with a long lease were valued around £240,600. The average ground rent payable was £65 collected per annum. The lease expired on 6 May 2088. Taking into account 62 years unexpired we approximated the compensation to the landlord to extend the lease to be between £21,900 and £25,200 exclusive of legals.