Shirehampton Lease Extension - Free Consultation

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Top reasons for Shirehampton lease extension


Main reasons to commence your Shirehampton lease extension today:

Increase your lease and increase your Shirehampton property value

As the length of the unexpired term of a Shirehampton domestic lease decreases so does its value and therefore the value of your property. Where the lease has, more than 100 years remaining then this decrease may be negligible nevertheless there will become a stage when a lease has fewer than 80 years remaining as part of the premium you will incur is what is known as a marriage value. This could increase sharply the cost. It is the primary rational as to why you should consider extending sooner rather than later. Many flat owners in Shirehampton will qualify for this right; nevertheless a conveyancer will be able to confirm if you qualify to extend your lease. In certain situations you may not qualify, the most common reason being that you have owned the property for under two years.

An extended lease has roughly the same value as a freehold

It is conventional wisdom that a property with in excess of one hundred years remaining is worth approximately the equivalent as a freehold. Where an additional ninety years added to any lease with more than 35 years remaining, the premises will be worth the same as a freehold for many years in the future.

Lending institutions may decide not to grant a mortgage on a short lease

The trend since 2008 has been for banks to tighten lending criteria across the board - this has extended to the types of security over which the mortgage is to be granted. This has meant the minimum number of years remaining under the lease required by banks has increased. In the past lenders would grant a mortgage on a lease with 25 years plus the term of the loan - routinely 50 year leases but those requirements evolved by the requirement for longer and longer leases - many use a minimum term of 75 years as a prerequisite.

Lender Requirement
Birmingham Midshires Minimum 70 years from the date of the mortgage.
Chelsea 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.
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.
Nationwide Building Society - Our minimum unexpired lease term is 55 years, except where lending is over 85% of the purchase price/valuation on a second hand flat, in which case our minimum unexpired term is 90 years.
- There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start).

Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer
- Where lending is over 85% of the purchase price/valuation on a second hand flat and the unexpired lease term on the offer is 90 years or more - only advise us if the actual lease term is less than 90 years.

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 55 years
- Unexpired lease term less than 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period is less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 55 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial, etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years (Minimum 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat)
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (Will be declined)
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house (does not apply to Shared Ownership)
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn Ground Rent (Annual Rent) charges

For the avoidance of doubt, any New Build properties completed but not sold pre-30 June 2022 will only be acceptable if the Lease conforms to the above guidance.

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years.

Lease Extensions

We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to Issuing Office.

Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning.
Royal Bank of Scotland Mortgage term plus 30 years.

Get in touch with one of our Shirehampton lease extension solicitors or enfranchisement solicitors

Lease extensions in Shirehampton can be a difficult process. We recommend you get professional help from a lawyer and valuer with experience in this area.

We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge procuring Shirehampton lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.

Shirehampton Lease Extension Example Cases:

Tyler, Shirehampton, Bristol

Two years ago Tyler, came critically close to the 80-year mark with the lease on his studio apartment in Shirehampton. In buying his home twenty years ago, the lease term was of no significance. Thankfully, it dawned on him that he would soon be paying an escalated premium for a lease extension. Tyler extended the lease just under the wire in January. Tyler and the landlord who owned the flat above in the end agreed on a premium of £6,000 . If the lease had gone lower than eighty years, the figure would have become more costly by at least £925.

Shirehampton case:

In 2014 we were phoned by Dr I Flores who, having purchased a recently refurbished apartment in Shirehampton in November 2007. We are asked if we could estimate the compensation to the landlord could be to extend the lease by ninety years. Comparative premises in Shirehampton with 100 year plus lease were valued about £235,200. The average ground rent payable was £45 billed yearly. The lease ran out in 2091. Given that there were 66 years as a residual term we calculated the compensation to the freeholder for the lease extension to be between £12,400 and £14,200 exclusive of costs.

Shirehampton case:

Last August we were contacted by Dr J Rose , who completed a studio apartment in Shirehampton in November 1996. The question was if we could shed any light on how much (approximately) compensation to the landlord would likely be to extend the lease by ninety years. Identical homes in Shirehampton with an extended lease were valued around £275,000. The mid-range amount of ground rent was £55 billed quarterly. The lease ran out on 1 June 2102. Given that there were 77 years outstanding we estimated the compensation to the freeholder to extend the lease to be between £13,300 and £15,400 plus costs.