Rowen residential property owned on a long lease is a depreciating asset because a leaseholder merely owns the property for a set term.
It is conventional wisdom that a residential leasehold with over 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to any lease with more than 45 years unexpired, the premises will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| 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 |
| 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. |
Using our service will provide you increased control over the value of your Rowen leasehold, as your property will be more valuable and marketable in respect of lease length should you want to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Sam was the the leasehold proprietor of a studio flat in Rowen on the market with a lease of fraction over 61 years remaining. Sam on an informal basis approached his freeholder being a well known London-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years on the basis of a new rent at the outset set at £100 per annum and increase every twenty five years thereafter. No ground rent would be due on a lease extension were Sam to exercise his statutory right. Sam procured expert legal guidance and was able to make an informed judgement and handle with the matter and readily saleable.
Dr H Hall completed a recently refurbished flat in Rowen in February 1997. The dilemma was if we could estimate the compensation to the landlord would be for a 90 year lease extension. Comparative premises in Rowen with a long lease were in the region of £280,000. The mid-range amount of ground rent was £45 billed every twelve months. The lease ended in 2096. Considering the 70 years unexpired we approximated the premium to the landlord for the lease extension to be within £12,400 and £14,200 exclusive of professional charges.
In 2009 we were called by Mrs D Phillips who, having took over the lease of a purpose-built flat in Rowen in August 2004. The dilemma was if we could estimate the premium would likely be for a ninety year extension to my lease. Similar properties in Rowen with 100 year plus lease were worth £223,400. The average amount of ground rent was £60 collected annually. The lease lapsed in 2085. Taking into account 59 years left we estimated the premium to the freeholder to extend the lease to be within £27,600 and £31,800 plus expenses.