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Top reasons for Tewkesbury lease extension


Top reasons for lease extension now:

A Tewkesbury leasehold property depreciates with the years remaining on the lease.

The market value of a leasehold property in Tewkesbury is impacted by how many years the lease has remaining. If it is close to or less than 80 years you should foresee problems on re-sale, so it is recommended to arrange for a lease extension ahead of buying. It is ideal to start the lease extension process when the lease still has 82 years remaining so that formalities can be addressed ahead of the eighty year threshold. Statute entitles Tewkesbury qualifying lessees to an additional term of 90 years on top of the unexpired term, at a peppercorn rent (no ground rent). The intention of the valuation is to determine the sum payable by the lessee to the freeholder for the acquisition of the lease extension.

Tewkesbury property with a lease extension has roughly the same value as a freehold

Leasehold residencies in Tewkesbury with more than 100 years unexpired on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and service charges warrant it.

Banks and Building Societies will not issue a mortgage with a short lease

Mortgage companies are tightening their criteria and a meaningful number now require flats to have a minimum of 60 if not 70 years left at the expiry of the mortgage. Considering a number of flats in Tewkesbury were built in the 1950s, 1960s and 1970s this means many now need to be extended if they wish to get a mortgage.

Lender Requirement
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.
TSB Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
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

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 70 years
- 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 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 70 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 1.0% 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
- 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
- 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 reviewed and altered on any review basis or methodology

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 1.0% 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 the Issuing Office
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.

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

The lawyers that we work with procure Tewkesbury lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The conveyancing solicitor we work with provide it.

Tewkesbury Lease Extension Example Cases:

Alfie, Tewkesbury, Gloucestershire

Last year Alfie, came seriously near to the eighty-year mark with the lease on his leasehold flat in Tewkesbury. Having purchased his flat twenty years ago, the unexpired term was of minimal relevance. Fortunately, it dawned on him that he would imminently be paying an escalated premium for Extending the lease. Alfie arranged for a lease extension just under the wire last July. Alfie and the freeholder eventually agreed on sum of £5,000 . If he not met the deadline, the sum would have gone up by at least £975.

Tewkesbury case:

In 2011 we were contacted by Mr and Mrs. I Howard who, having owned a garden apartment in Tewkesbury in August 1997. We are asked if we could estimate the compensation to the landlord could be for a 90 year lease extension. Similar properties in Tewkesbury with 100 year plus lease were valued about £181,600. The mid-range ground rent payable was £55 collected yearly. The lease finished in 2076. Considering the 52 years remaining we approximated the premium to the freeholder for the lease extension to be between £30,400 and £35,200 not including costs.

Tewkesbury case:

Last Summer we were approach by Mr and Mrs. P Robinson , who took over the lease of a garden flat in Tewkesbury in March 2000. The question was if we could approximate the premium could be to extend the lease by an additional years. Similar residencies in Tewkesbury with an extended lease were valued around £285,000. The mid-range ground rent payable was £45 billed annually. The lease terminated in 2096. Having 72 years outstanding we calculated the premium to the freeholder to extend the lease to be within £12,400 and £14,200 plus professional charges.