It’s an underpublicised certainty that a Wigan 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 first few years due to the deflation being disguised by increases in the Wigan property prices.Where your lease has approximately 90 years left, you need to start considering a lease extension. If lease term slips below eighty years, you will end up paying 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of extra value that a lease extension will add the property Most leasehold owners in Wigan will be able to extend under the legislation; however a conveyancer should be able to confirm whether you are eligibility. In some situations you may not qualify. There are also strict timetables and procedures to be adhered to once the process is initiated and you will need to be guided by your lawyer from beginning to end of the formalities.
It is generally considered that a property with in excess of one hundred years remaining is worth roughly the same as a freehold. Where an additional ninety years added to any lease with more than 35 years remaining, the premises will be equivalent in value to a freehold for many years in the future.
| 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
The conveyancers that we work with handle Wigan 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.
Dexter was the the leasehold owner of a high value flat in Wigan being sold with a lease of fraction over fifty eight years unexpired. Dexter on an informal basis approached his freeholder a well known Bristol-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years subject to a new rent initially set at £200 per annum and doubled every 25 years thereafter. No ground rent would be due on a lease extension were Dexter to invoke his statutory right. Dexter procured expert advice and was able to make a more informed judgement and deal with the matter and readily saleable.
Dr Tyler Taylor owned a purpose-built apartment in Wigan in January 2006. We are asked if we could approximate the compensation to the landlord would likely be for a ninety year lease extension. Comparable residencies in Wigan with 100 year plus lease were worth £210,600. The average ground rent payable was £45 collected annually. The lease expiry date was on 7 January 2088. Taking into account 62 years remaining we estimated the premium to the freeholder to extend the lease to be between £18,100 and £20,800 not including fees.
Dr Zachary Leroy purchased a garden flat in Wigan in October 2005. We are asked if we could estimate the premium would be to extend the lease by a further 90 years. Comparative flats in Wigan with an extended lease were valued about £265,000. The mid-range ground rent payable was £50 invoiced every twelve months. The lease lapsed on 18 June 2099. Given that there were 73 years as a residual term we approximated the premium to the landlord for the lease extension to be within £9,500 and £11,000 exclusive of expenses.