When it comes to residential leasehold premises in Sale, you effectively rent it for a certain period of time. These days flat leases are usually granted for 99 years or 125. Even though this may appear like a long period of time, you may think about extending the lease sooner rather than later. The general rule is that the shorter the number of years is the cost of extending the lease becomes disproportionately greater especially when there are fewer than eighty years left. Anyone in Sale with a lease drawing near to 81 years left should seriously consider extending it sooner than later. Once the lease term has under eighty years outstanding, under the current statute the landlord can calculate and charge a larger premium, based on a technical computation, strangely termed as “marriage value” which is payable.
It is conventional wisdom that a property with over one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years in the future.
| 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; |
| Halifax | Minimum 70 years from the date of the mortgage. |
| 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. |
| 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. |
The conveyancing solicitors that we work with undertake Sale 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 lawyer we work with provide it.
Half a year ago Joseph, started to get near to the eighty-year threshold with the lease on his purpose- built flat in Sale. In buying his property 19 years previously, the length of the lease was of minimal relevance. by good luck, he became aware that he would imminently be paying an escalated premium for a lease extension. Joseph extended the lease just under the wire in May. Joseph and the freeholder via the managing agents ultimately agreed on sum of £5,500 . If he had missed the deadline, the amount would have become more exhorbitant by at least £1,125.
In 2011 we were contacted by Mr Luca Petit who, having moved into a studio flat in Sale in January 2003. We are asked if we could estimate the premium could be to extend the lease by 90 years. Identical premises in Sale with a long lease were in the region of £245,000. The average amount of ground rent was £50 invoiced quarterly. The lease ended on 8 October 2094. Given that there were 68 years outstanding we estimated the compensation to the landlord for the lease extension to be within £9,500 and £11,000 plus costs.
In 2012 we were phoned by Dr Matthew Watson who, having bought a recently refurbished flat in Sale in February 2004. The dilemma was if we could approximate the premium would be for a ninety year lease extension. Comparative properties in Sale with 100 year plus lease were worth £285,000. The mid-range amount of ground rent was £55 collected yearly. The lease elapsed in 2105. Given that there were 79 years left we calculated the compensation to the landlord to extend the lease to be within £13,300 and £15,400 plus costs.