It’s a harsh truth that a Rye residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the first few years due to the depreciation being disguised by increases in the Rye property prices.Once your lease gets to 85ish years, you should start thinking about a lease extension. If lease term falls 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 the landlord. Marriage value is the amount of extra value that a lease extension will add the property The majority of flat owners in Rye will be able to extend under the legislation; however a conveyancing solicitor should be able to clarify whether you are eligibility. In some situations you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process is instigated and you will need to be guided by your conveyancer throughout the formalities.
It is generally considered that a property with over 100 years remaining is worth roughly the equivalent as a freehold. Where an additional 90 years added to any lease with more than 35 years unexpired, the premises will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| 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; |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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 conveyancing solicitors that we work with undertake Rye 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.
Archie owned a high value apartment in Rye being sold with a lease of a little over sixty years left. Archie on an informal basis contacted his landlord being a well known London-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to grant an extension taking the lease to 125 years on the basis of an increased rent to £50 yearly. No ground rent would be due on a lease extension were Archie to invoke his statutory right. Archie procured expert advice and secured satisfactory deal without going to tribunal and sell the flat.
In 2011 we were e-mailed by Mr and Mrs. T Rogers who, having completed a one bedroom flat in Rye in July 2002. The question was if we could shed any light on how much (approximately) price could be for a 90 year extension to my lease. Comparable properties in Rye with 100 year plus lease were worth £166,800. The average ground rent payable was £50 invoiced monthly. The lease ran out in 2075. Taking into account 50 years unexpired we calculated the compensation to the freeholder for the lease extension to be between £32,300 and £37,400 exclusive of legals.
In 2013 we were phoned by Dr C Morel who, having acquired a recently refurbished flat in Rye in March 1999. The question was if we could approximate the premium would likely be to extend the lease by an additional years. Comparative residencies in Rye with 100 year plus lease were in the region of £280,000. The mid-range amount of ground rent was £45 billed yearly. The lease ran out in 2095. Considering the 70 years unexpired we calculated the premium to the freeholder to extend the lease to be between £12,400 and £14,200 not including costs.