It’s a harsh truth that a Thornaby residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is taken for granted in the early years due to the depreciation being disguised by increases in the Thornaby property prices.Once your lease nears 85ish years, you should 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 falls below eighty years - otherwise a higher premium will be payable. The majority of flat owners in Thornaby will be able to extend under the legislation; however a conveyancing solicitor will be able to confirm if you qualify for an extension. In some cases you may not be entitled. There are also strict timetables and procedures to follow once the process is initiated and you will need to be guided by your conveyancer for the duration of the formalities.
Leasehold premises in Thornaby with more than one hundred years left on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and estate charges merit it.
| 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 are not acceptable. 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; |
| 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. |
| 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. |
| 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. |
The conveyancers that we work with handle Thornaby 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 conveyancer we work with provide it.
In recent months Connor, started to get near to the eighty-year threshold with the lease on his first floor apartment in Thornaby. Having purchased his property twenty years ago, the unexpired term was of little interest. Thankfully, he noticed he needed to take steps soon on a lease extension. Connor extended the lease just ahead of time in March. Connor and the landlord who owned the flat above subsequently agreed on a premium of £5,000 . If he not met the deadline, the price would have escalated by a minimum £1,025.
Dr Liam Edwards moved into a basement flat in Thornaby in June 1998. The question was if we could estimate the compensation to the landlord would be for a 90 year lease extension. Similar properties in Thornaby with a long lease were valued about £285,000. The mid-range ground rent payable was £55 invoiced every twelve months. The lease came to a finish on 4 November 2106. Considering the 80 years unexpired we approximated the compensation to the freeholder for the lease extension to be between £12,400 and £14,200 plus legals.
Mrs U Ricardo completed a one bedroom apartment in Thornaby in August 2008. The dilemma was if we could shed any light on how much (roughly) compensation to the landlord could be to prolong the lease by 90 years. Comparable premises in Thornaby with a long lease were worth £200,800. The average amount of ground rent was £65 collected monthly. The lease ended in 2086. Given that there were 60 years unexpired we estimated the premium to the freeholder for the lease extension to be between £20,900 and £24,200 exclusive of costs.