The market value of a leasehold property in Barrow upon Humber is impacted by how many years the lease has remaining. If it is close to or less than eighty years you should foresee problems on re-sale, so it is recommended to arrange for the lease to be extended prior to purchasing. It is ideal to start the process of extending the lease is when the lease still has 82 years remaining so that all matters can be addressed prior to the 80 year threshold. Current legislation enables Barrow upon Humber qualifying lessees to an additional term of ninety years on top of the existing term, at a nominal rent (zero ground rent). The intention of the valuation is to arrive at an opinion of the amount payable by the lessee to the freeholder for the purchase of the lease extension.
Leasehold residencies in Barrow upon Humber with more than one hundred years left on the lease are sometimes 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 service charges justify it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| 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. |
| 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. |
The lawyers that we work with procure Barrow upon Humber 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 conveyancer we work with provide it.
Harrison owned a high value apartment in Barrow upon Humber on the market with a lease of a few days over 59 years left. Harrison on an informal basis approached his landlord a well known local-based freehold company and enquired on a premium to extend the lease. The landlord was keen to grant an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £200 yearly. Ordinarily, ground rent would not be due on a lease extension were Harrison to invoke his statutory right. Harrison obtained expert advice and was able to make an informed judgement and deal with the matter and ending up with a market value flat.
Last year we were contacted by Mr and Mrs. H Johnson , who bought a first floor flat in Barrow upon Humber in April 2010. The dilemma was if we could estimate the price would be to extend the lease by a further 90 years. Identical flats in Barrow upon Humber with a long lease were valued about £285,000. The mid-range ground rent payable was £55 collected per annum. The lease concluded on 17 October 2104. Given that there were 79 years remaining we estimated the premium to the freeholder for the lease extension to be between £13,300 and £15,400 plus costs.
Mrs I Murphy owned a garden apartment in Barrow upon Humber in August 2009. We are asked if we could estimate the premium could be for a 90 year lease extension. Similar properties in Barrow upon Humber with a long lease were in the region of £193,400. The mid-range ground rent payable was £65 billed per annum. The lease lapsed in 2084. Having 59 years as a residual term we estimated the compensation to the freeholder for the lease extension to be within £21,900 and £25,200 plus fees.