The market value of Aylestone leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of a lease extension can increase materialy once the remaining term is less than eighty years
It is generally considered that a residential leasehold with more than one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be equivalent in value to a freehold for many years ahead.
| 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. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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. |
Engaging our service will provide you better control over the value of your Aylestone leasehold, as your property will be more valuable and saleable in respect of lease length should you wish to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Jackson was the the leasehold owner of a conversion apartment in Aylestone being sold with a lease of fraction over 61 years left. Jackson informally spoke with his landlord being a well known Bristol-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years on the basis of a new rent to start with set at £100 per annum and increase every 25 years thereafter. Ordinarily, ground rent would not be due on a lease extension were Jackson to exercise his statutory right. Jackson obtained expert advice and was able to make a more informed decision and deal with the matter and ending up with a market value flat.
In 2014 we were called by Dr Muhammad Bertrand who, having owned a ground floor apartment in Aylestone in November 2001. We are asked if we could estimate the price could be for a ninety year lease extension. Comparative flats in Aylestone with 100 year plus lease were in the region of £166,400. The average ground rent payable was £60 collected yearly. The lease terminated on 22 February 2080. Considering the 54 years left we approximated the premium to the landlord to extend the lease to be within £32,300 and £37,400 plus expenses.
Mr Luke Michel acquired a basement apartment in Aylestone in August 1997. The dilemma was if we could estimate the compensation to the landlord would be for a ninety year lease extension. Identical flats in Aylestone with an extended lease were valued around £232,800. The average amount of ground rent was £45 billed annually. The lease ran out in 2091. Given that there were 65 years as a residual term we calculated the premium to the freeholder for the lease extension to be between £13,300 and £15,400 plus legals.