The value of Banwell leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of a lease extension can escalate substantially once the unexpired lease term is less than 80 years
Leasehold premises in Banwell with more than 100 years outstanding on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and service charges justify it.
| 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; |
| 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. |
| 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. |
Engaging our service gives you enhanced control over the value of your Banwell leasehold, as your property will be more valuable and marketable in relation to the lease length should you decide to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Omar was the the leasehold owner of a studio flat in Banwell on the market with a lease of a few days over 72 years unexpired. Omar on an informal basis contacted his freeholder being a well known local-based freehold company for a lease extension. The freeholder was prepared to grant an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £125 per annum. No ground rent would be due on a lease extension were Omar to exercise his statutory right. Omar obtained expert legal guidance and was able to make a more informed judgement and deal with the matter and ending up with a market value flat.
Last month we were called by Mr and Mrs. U Ward , who was assigned a lease of a first floor flat in Banwell in September 2002. We are asked if we could estimate the compensation to the landlord would likely be to prolong the lease by 90 years. Identical residencies in Banwell with an extended lease were valued around £254,200. The average ground rent payable was £60 collected yearly. The lease end date was on 24 August 2077. Taking into account 51 years outstanding we estimated the premium to the landlord to extend the lease to be between £43,700 and £50,600 not including costs.
In 2014 we were approached by Mrs F Ramírez who, having moved into a garden flat in Banwell in January 2006. The dilemma was if we could approximate the compensation to the landlord could be to prolong the lease by an additional years. Comparable homes in Banwell with 100 year plus lease were worth £210,600. The average ground rent payable was £45 invoiced annually. The lease elapsed in 2088. Given that there were 62 years unexpired we calculated the compensation to the freeholder for the lease extension to be between £18,100 and £20,800 exclusive of fees.