Baldock 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 becomes more expensive. It is the case that most Baldock tenants have the right to extend their lease by an additional 90 years by virtue of the 1993 Leasehold Reform Act. Where you are a leasehold owner in Baldock you should investigate if your lease has between 70 and ninety years left. In particular once the remaining lease term slips under eighty years, the premium due on any lease extension sharply increases as an element of the premium you pay is what is known as a marriage value
Leasehold premises in Baldock with over one hundred years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and estate charges merit it.
| 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. |
| 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with procure Baldock 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.
Last October Isaac, started to get close to the 80-year mark with the lease on his two bedroom flat in Baldock. In buying his property twenty years previously, the length of the lease was of no bearing. Thankfully, he became aware that he would imminently be paying an escalated premium for Extending the lease. Isaac extended the lease at the eleventh hour in August. Isaac and the landlord in the end settled on an amount of £5,000 . If the lease had slipped to less than 80 years, the premium would have escalated by a minimum £1,125.
Mr and Mrs. K Ricardo owned a recently refurbished flat in Baldock in October 2000. The dilemma was if we could approximate the compensation to the landlord would be to prolong the lease by an additional years. Identical flats in Baldock with an extended lease were in the region of £223,400. The mid-range ground rent payable was £60 collected annually. The lease elapsed in 2085. Having 59 years as a residual term we approximated the compensation to the landlord for the lease extension to be within £27,600 and £31,800 plus costs.
In 2013 we were called by Dr Aarav Petit who, having moved into a basement apartment in Baldock in May 2000. The question was if we could approximate the price would likely be to prolong the lease by ninety years. Comparable flats in Baldock with a long lease were valued about £205,000. The average amount of ground rent was £50 invoiced quarterly. The lease termination date was on 14 February 2105. Considering the 79 years as a residual term we approximated the compensation to the freeholder to extend the lease to be between £8,600 and £9,800 not including fees.