Unfortunately that a Sale residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the first few years due to the deflation being disguised by increases in the Sale property prices.Where your lease has approximately ninety years left, you need to start considering a lease extension. If the number of years remaining dips under eighty years, you will then be required to pay 50% of the property's 'marriage value' on top of 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 Sale will be able to extend under the legislation; however a lawyer should be able to confirm whether you are eligibility. In some situations you may not qualify. There are also strict deadlines and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancing solicitor throughout the formalities.
Leasehold properties in Sale with over one hundred years remaining on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little upside in buying the reversionary interest unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Engaging our service gives you enhanced control over the value of your Sale leasehold, as your property will be more valuable and saleable 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.
Trailing lengthy correspondence with the landlord of her purpose-built apartment in Sale, Katherine started the lease extension process just as the lease was nearing the crucial eighty-year mark. The legal work was finalised in January 2012. The landlord’s fees were restricted to below 550 pounds.
In 2012 we were phoned by Dr U Bernard who, having completed a garden flat in Sale in March 2008. We are asked if we could estimate the price could be to extend the lease by ninety years. Comparative properties in Sale with a long lease were in the region of £255,000. The mid-range amount of ground rent was £50 billed every twelve months. The lease finished on 1 March 2096. Taking into account 71 years as a residual term we approximated the premium to the freeholder to extend the lease to be between £9,500 and £11,000 not including costs.
Last November we were e-mailed by Mr P Dupont , who moved into a first floor flat in Sale in September 2006. The dilemma was if we could approximate the compensation to the landlord would be to prolong the lease by ninety years. Comparative homes in Sale with 100 year plus lease were valued around £254,200. The mid-range amount of ground rent was £60 invoiced quarterly. The lease finished on 22 October 2076. Considering the 51 years left we calculated the compensation to the landlord for the lease extension to be between £43,700 and £50,600 exclusive of legals.