Abercarn leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease gets more expensive. Legislation has been in place for sometime now which entitles qualifying Abercarn residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Abercarn you really ought to check if your lease has between 70 and 90 years remaining. In particular once the remaining lease term slips under 80 years, the premium due on any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
Leasehold residencies in Abercarn with more than 100 years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little to be gained by buying the freehold unless savings on ground rent and estate charges merit it.
| 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. |
| 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; |
| Godiva Mortgages | 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The lawyers that we work with procure Abercarn 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.
Last October Freddie, started to get near to the 80-year mark with the lease on his garden flat in Abercarn. Having purchased his home two decades ago, the length of the lease was of minimal significance. Thankfully, he realised he needed to take action soon on a lease extension. Freddie was able to extend his lease just under the wire last August. Freddie and the landlord who owned the flat above eventually agreed on a premium of £5,500 . If the lease had gone to less than 80 years, the price would have become more exhorbitant by at least £975.
Mr R Rose was assigned a lease of a one bedroom apartment in Abercarn in July 1999. The dilemma was if we could shed any light on how much (approximately) price could be to prolong the lease by ninety years. Comparable residencies in Abercarn with an extended lease were in the region of £260,200. The mid-range ground rent payable was £65 billed quarterly. The lease came to a finish in 2091. Having 66 years unexpired we calculated the premium to the freeholder for the lease extension to be within £16,200 and £18,600 plus legals.
In 2011 we were called by Dr C Turner who, having owned a one bedroom apartment in Abercarn in August 2007. The question was if we could estimate the premium would be to prolong the lease by 90 years. Identical residencies in Abercarn with 100 year plus lease were valued about £198,800. The average amount of ground rent was £55 collected every twelve months. The lease came to a finish on 25 January 2080. Taking into account 55 years left we calculated the premium to the freeholder for the lease extension to be between £33,300 and £38,400 plus professional charges.