Yate leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease gets more expensive. Legislation has been in place for sometime now which permits qualifying Yate residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Yate you should see if your lease has between 70 and 90 years remaining. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
It is conventional wisdom that a residential leasehold with in excess of one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an further ninety years added to any lease with more than 35 years left, the property will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Coventry Building Society | A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. |
| Halifax | 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. |
| 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 Yate 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 lawyer we work with provide it.
In 2014 Luke, started to get close to the 80-year threshold with the lease on his basement flat in Yate. In buying his flat twenty years ago, the unexpired term was of little bearing. Fortunately, he realised he needed to take action soon on Extending the lease. Luke arranged for a lease extension at the eleventh hour in August. Luke and the freeholder via the management company ultimately settled on sum of £5,000 . If he not met the deadline, the sum would have become more exhorbitant by at least £1,025.
Last Summer we were contacted by Mrs M Gray , who purchased a newly refurbished flat in Yate in April 2012. We are asked if we could shed any light on how much (roughly) compensation to the landlord would be for a 90 year lease extension. Comparative residencies in Yate with an extended lease were valued around £300,000. The mid-range ground rent payable was £50 billed every twelve months. The lease terminated on 12 February 2102. Given that there were 76 years as a residual term we approximated the compensation to the freeholder for the lease extension to be between £8,600 and £9,800 exclusive of legals.
Last Summer we were contacted by Mr Sebastian Moore , who completed a one bedroom flat in Yate in June 2010. We are asked if we could estimate the premium could be to extend the lease by an additional years. Similar properties in Yate with a long lease were worth £257,800. The mid-range amount of ground rent was £65 collected annually. The lease came to a finish in 2091. Taking into account 65 years left we calculated the premium to the landlord for the lease extension to be within £18,100 and £20,800 not including costs.