The re-sale value of a leasehold property in Shaftesbury is impacted by how many years the lease has left to run. If it is close to or fewer than 80 years you should foresee problems on re-sale, so it is recommended to arrange for a lease extension before buying. It is preferable to commence the lease extension process when a lease still has 82 years unexpired so that formalities can be concluded prior to the eighty year cut off point. Statute enables Shaftesbury qualifying lessees to a ninety year extension added to their unexpired lease term (ie if your lease has fifty years left the statutory lease extension will provide a new term of 140 years). The reason of the valuation is to arrive at an opinion of the premium payable by the lessee to the freeholder for the acquisition of the lease extension.
It is generally accepted that a residential leasehold with in excess of 100 years unexpired lease term is worth approximately the same as a freehold. Where an additional 90 years added to any lease with more than 45 years remaining, the premises will be worth the same as a freehold for decades to come.
| 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. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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. |
Regardless of whether you are a tenant or a landlord in Shaftesbury,the lease extension experts that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Shaftesbury valuers.
Last October Jasper, came seriously near to the eighty-year threshold with the lease on his two bedroom flat in Shaftesbury. In buying his property 18 years ago, the unexpired term was of little importance. Thankfully, he noticed he would soon be paying an escalated premium for Extending the lease. Jasper extended the lease just ahead of time last May. Jasper and the freeholder via the managing agents ultimately agreed on a premium of £5,500 . If the lease had descended lower than 80 years, the figure would have increased by at least £1,125.
In 2010 we were called by Mr and Mrs. N Moore who, having completed a studio apartment in Shaftesbury in March 1995. We are asked if we could estimate the price would be for a ninety year extension to my lease. Similar premises in Shaftesbury with a long lease were in the region of £216,000. The mid-range ground rent payable was £60 collected quarterly. The lease ran out on 16 July 2083. Considering the 58 years unexpired we estimated the premium to the landlord to extend the lease to be within £28,500 and £33,000 plus expenses.
Mr and Mrs. S Girard owned a recently refurbished apartment in Shaftesbury in August 2010. We are asked if we could approximate the premium would be for a ninety year lease extension. Similar premises in Shaftesbury with an extended lease were valued about £200,000. The mid-range ground rent payable was £50 invoiced yearly. The lease ran out on 15 September 2103. Considering the 78 years left we calculated the compensation to the landlord to extend the lease to be between £8,600 and £9,800 not including legals.