For those whose Swanland home is held on a long lease, our message is clear – if no remedial action is taken, the property will eventually 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 extend the lease.
It is conventional wisdom that a property with more than 100 years unexpired lease term is worth roughly the same as a freehold. Where an additional 90 years added to any lease with more than 35 years remaining, the premises will be equivalent in value to a freehold for many years ahead.
| 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 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. |
Using our service gives you better control over the value of your Swanland leasehold, as your property will be more valuable and saleable in terms of lease length should you wish to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
In 2014 Caleb, came critically close to the eighty-year threshold with the lease on his first floor apartment in Swanland. In buying his flat twenty years ago, the lease term was of little relevance. Thankfully, he realised he would soon be paying way over the odds for Extending the lease. Caleb extended the lease just ahead of time in May. Caleb and the freeholder via the managing agents eventually settled on sum of £6,000 . If he had missed the deadline, the amount would have increased by a minimum £1,100.
In 2014 we were approached by Dr R Hernández who, having was assigned a lease of a ground floor flat in Swanland in June 2002. The dilemma was if we could approximate the compensation to the landlord would be to extend the lease by an additional years. Comparable properties in Swanland with 100 year plus lease were in the region of £218,400. The mid-range amount of ground rent was £60 collected monthly. The lease termination date was on 5 May 2084. Given that there were 59 years as a residual term we calculated the premium to the freeholder to extend the lease to be within £27,600 and £31,800 exclusive of professional charges.
Last April we were phoned by Dr Ethan Young , who owned a one bedroom apartment in Swanland in September 2005. The question was if we could shed any light on how much (approximately) premium would likely be to prolong the lease by a further 90 years. Identical residencies in Swanland with an extended lease were valued about £205,000. The mid-range ground rent payable was £50 invoiced monthly. The lease ran out in 2104. Taking into account 79 years unexpired we estimated the compensation to the landlord for the lease extension to be within £7,600 and £8,800 exclusive of legals.