For anyone whose Sale property is held on a long lease, our message is clear – if no remedial action is taken, your property will ultimately revert to your landlord, leaving you empty-handed. The fewer the years remaining the lower the value of the property and the more it will cost to obtain a lease extension.
It is conventional wisdom that a residential leasehold with over one hundred years remaining is worth roughly the same as a freehold. Where an additional ninety years added to all but the shortest lease, the property 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; |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date 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. |
Using our service will provide you increased control over the value of your Sale leasehold, as your property will be more valuable and saleable in relation to the lease length should you want to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Two years ago Joseph, came dangerously close to the 80-year mark with the lease on his two bedroom flat in Sale. In buying his property two decades ago, the length of the lease was of no relevance. Thankfully, it dawned on him that he needed to take steps soon on Extending the lease. Joseph was able to extend his lease at the eleventh hour last June. Joseph and the freeholder subsequently agreed on the final figure of £6,000 . If he failed to meet the deadline, the amount would have increased by a minimum £1,075.
Last Spring we were contacted by Dr Naomi Flores , who was assigned a lease of a one bedroom flat in Sale in September 2006. The dilemma was if we could estimate the price would be to prolong the lease by a further 90 years. Comparative flats in Sale with 100 year plus lease were in the region of £210,600. The average ground rent payable was £45 invoiced annually. The lease concluded in 2088. Given that there were 62 years outstanding we calculated the compensation to the landlord for the lease extension to be within £18,100 and £20,800 plus expenses.
Last July we were phoned by Mr and Mrs. W Parker , who was assigned a lease of a one bedroom apartment in Sale in October 2007. The question was if we could approximate the compensation to the landlord would likely be for a ninety year extension to my lease. Comparable premises in Sale with a long lease were valued around £265,000. The average amount of ground rent was £50 invoiced per annum. The lease finished in 2099. Having 73 years remaining we calculated the premium to the freeholder for the lease extension to be between £9,500 and £11,000 exclusive of professional charges.