Unfortunately that a Rye residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is taken for granted in the first few years due to the reduction being disguised by increases in the Rye property prices.Once your lease gets to 85ish years, you should start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease dips lower than eighty years - otherwise a higher premium will be due. The majority of flat owners in Rye will be able to extend under the legislation; however a conveyancing solicitor should be able to clarify if you are eligibility. In some situations you may not be entitled. There are also strict timetables and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancer for the duration of the process.
Leasehold properties in Rye with in excess of one hundred years outstanding on the lease are often 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 upside in buying the freehold unless savings on ground rent and estate charges merit it.
| 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 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; |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset of the mortgage. |
Irrespective of whether you are a tenant or a freeholder in Rye,the lease extension experts that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Rye valuers.
Evan owned a studio flat in Rye on the market with a lease of a few days over 61 years outstanding. Evan informally contacted his landlord a well known local-based freehold company and enquired on a premium to extend the lease. The landlord was prepared to agree an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £150 per annum and increase every 25 years thereafter. No ground rent would be due on a lease extension were Evan to invoke his statutory right. Evan obtained expert legal guidance and secured an acceptable resolution informally and sell the flat.
In 2013 we were phoned by Ms Chelsea Gunderson who, having owned a first floor flat in Rye in October 1998. The question was if we could estimate the compensation to the landlord could be to extend the lease by a further 90 years. Identical residencies in Rye with a long lease were worth £290,000. The mid-range amount of ground rent was £45 collected quarterly. The lease expiry date was on 6 January 2099. Having 73 years as a residual term we estimated the compensation to the freeholder for the lease extension to be within £9,500 and £11,000 exclusive of legals.
In 2012 we were contacted by Mr Isaac Morgan who, having bought a studio apartment in Rye in June 2009. The dilemma was if we could shed any light on how much (approximately) price would be for a 90 year extension to my lease. Comparative flats in Rye with an extended lease were in the region of £240,600. The average amount of ground rent was £60 billed annually. The lease ended on 2 February 2088. Having 62 years outstanding we estimated the premium to the landlord to extend the lease to be between £21,900 and £25,200 not including costs.