It’s a harsh certainty that a St Ives residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the depreciation being disguised by increases in the St Ives property prices.Once your lease nears 85ish years, you need to start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips under eighty years - otherwise a higher premium will be due. Most flat owners in St Ives will be able to extend under the legislation; however a lawyer will be able to clarify whether you are eligibility. In some situations you may not qualify. There are also strict timeframes and procedures to follow once the process has commenced and you will need to be guided by your lawyer for the duration of the formalities.
Leasehold properties in St Ives with more than 100 years left on the lease are often referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little upside in buying the freehold unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Halifax | 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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 will provide you enhanced control over the value of your St Ives leasehold, as your property will be more valuable and marketable in respect of lease length should you decide to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Eliot owned a high value flat in St Ives being sold with a lease of a little over 59 years unexpired. Eliot on an informal basis approached his freeholder a well known Manchester-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to extend the lease to 125 years on the basis of an increased rent to £125 per annum. Ordinarily, ground rent would not be due on a lease extension were Eliot to exercise his statutory right. Eliot obtained expert legal guidance and was able to make a more informed decision and handle with the matter and readily saleable.
In 2013 we were called by Mr William Petit who, having owned a one bedroom flat in St Ives in February 2006. The dilemma was if we could estimate the premium would likely be for a 90 year extension to my lease. Comparative residencies in St Ives with 100 year plus lease were in the region of £275,000. The average amount of ground rent was £55 collected annually. The lease termination date was in 2103. Given that there were 77 years outstanding we estimated the compensation to the landlord for the lease extension to be between £13,300 and £15,400 plus fees.
Mr George Díaz purchased a purpose-built flat in St Ives in November 2011. We are asked if we could estimate the compensation to the landlord could be to prolong the lease by ninety years. Identical properties in St Ives with 100 year plus lease were in the region of £183,600. The mid-range ground rent payable was £65 invoiced per annum. The lease came to a finish on 2 July 2083. Taking into account 57 years outstanding we approximated the compensation to the freeholder to extend the lease to be between £28,500 and £33,000 plus professional charges.