Arkley residential property held on a long lease is a depreciating asset because a leaseholder merely owns the property for a period of years.
It is conventional wisdom that a residential leasehold with more than 100 years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the premises will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The lawyers that we work with handle Arkley 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.
Freddie owned a 2 bedroom flat in Arkley on the market with a lease of a little over 61 years left. Freddie on an informal basis approached his landlord a well known Bristol-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to grant an extension taking the lease to 125 years on the basis of a rise in the rent to £125 per annum. Ordinarily, ground rent would not be payable on a lease extension were Freddie to invoke his statutory right. Freddie procured expert advice and secured satisfactory resolution informally and readily saleable.
In 2013 we were approached by Mr and Mrs. M Ali who, having completed a first floor apartment in Arkley in January 2001. We are asked if we could approximate the compensation to the landlord could be to extend the lease by a further 90 years. Similar properties in Arkley with a long lease were in the region of £205,000. The mid-range ground rent payable was £50 invoiced every twelve months. The lease ended on 23 August 2105. Considering the 79 years outstanding we calculated the compensation to the freeholder for the lease extension to be within £8,600 and £9,800 exclusive of expenses.
An example of a Lease Extension case for a Arkley residence is Ground Floor Maisonette 17 Milton Road in January 2014. The Tribunal determined the premium payable by the Applicant to the should be £13,299 This case related to 1 flat. The unexpired lease term was 71.73 years.