Owning a apartment usually means owning a lease of the property, which has a finite term of years. The lease will usually be granted for a fixed period of time , usually 99 or 125 years, although we have seen longer and shorter terms in Bala. Inevitably, the term of lease remaining shortens as time goes by. This is often ignored and only becomes a problem when the property needs to be disposed of or re-mortgaged. The fewer the years remaining the less it is worth and the more expensive it will be to extend the lease. Qualifying long lease owners in Bala have the legal entitlement to extend the lease for a further 90 years in accordance with Leasehold Reform legislation. You should give due consideration before delaying your Bala lease extension. Holding off the cost now likely increases the price you will eventually have to pay for a lease extension
It is generally accepted that a property with over one hundred years unexpired lease term is worth approximately the same 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 decades to come.
| Lender | Requirement |
|---|---|
| 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 also be not less than 75 years 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Regardless of whether you are a tenant or a landlord in Bala,the lease extension experts that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Bala valuers.
Jason owned a studio flat in Bala on the market with a lease of a little over fifty eight years unexpired. Jason informally approached his landlord being a well known Manchester-based freehold company for a lease extension. The freeholder indicated a willingness to grant an extension taking the lease to 125 years subject to a new rent to start with set at £100 per annum and increase every twenty five years thereafter. No ground rent would be payable on a lease extension were Jason to exercise his statutory right. Jason obtained expert advice and secured an acceptable resolution informally and sell the property.
Last May we were phoned by Dr Ellie Wright , who acquired a one bedroom apartment in Bala in January 1995. The question was if we could shed any light on how much (approximately) compensation to the landlord could be for a 90 year lease extension. Similar premises in Bala with an extended lease were valued around £275,000. The mid-range amount of ground rent was £55 invoiced every twelve months. The lease lapsed in 2102. Having 77 years unexpired we approximated the compensation to the landlord to extend the lease to be between £13,300 and £15,400 plus fees.
Last Autumn we were called by Mr and Mrs. V Pérez , who took over the lease of a ground floor apartment in Bala in September 2011. The dilemma was if we could estimate the premium would be for a 90 year lease extension. Comparable residencies in Bala with 100 year plus lease were worth £183,600. The average amount of ground rent was £65 invoiced every twelve months. The lease came to a finish on 4 September 2082. Given that there were 57 years left we approximated the premium to the landlord to extend the lease to be within £28,500 and £33,000 exclusive of expenses.