If you are facing a significant premium because your lease in Basingstoke has dropped toward the 80-year mark, your previous lawyer may be at fault. Our panel of experts specialise in recovering lease extension costs from negligent firms who failed to protect your investment.
Main reasons to commence your Basingstoke lease extension today:
Increase your lease and increase your Basingstoke property value
Unfortunately that a Basingstoke residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the first few years due to the loss of value being disguised by increases in the Basingstoke property prices.Once your lease gets to 85ish years, you need to start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease falls lower than 80 years - otherwise a higher premium will be due. The majority of flat owners in Basingstoke will be able to extend under the legislation; however a conveyancing solicitor will be able to confirm whether you qualify for an extension. In some cases you may not qualify. There are also strict timetables and procedures to follow once the process has commenced and you will need to be guided by your conveyancer throughout the process.
Basingstoke property with a lease extension has roughly the same value as a freehold
Leasehold premises in Basingstoke with in excess of one hundred years outstanding on the lease are often referred to as ‘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 purchasing the reversionary interest unless savings on ground rent and service charges warrant it.
Banks and Building Societies may not loan monies on a short lease
Banks and Building Societies have set criteria when lending funds charged on leasehold property. Many will simply not lend at all once the remaining lease term drops below a specified unexpired lease term. Many Mortgage lenders will not consider property with an unexpired below seventy years as adequate security. As well as this being important when selling, it is also relevant if you are intending to refinance your Basingstoke home.
| Lender |
Requirement
|
|---|
| 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 |
If the property is leasehold, the remaining unexpired lease term at the end of the new mortgage term must be at least 50 years where any part of the mortgage is on Interest Only and 30 years if all loan parts are on Capital Repayment and Interest. 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.
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
|
| TSB |
Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.
|
| The Mortgage Works |
Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:
Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer
New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer
Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.
SECOND HAND PROPERTIES
Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI
NEW BUILD PROPERTIES (includes office conversions)
Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges
For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance
* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years
Lease Extensions We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where a proposed Lease Extension does not meet these requirements, however you feel that this is in the best interest for our mutual client, please refer all details to the Issuing Office for us to consider.
Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning.
|
What makes us experts in Basingstoke lease extensions?
The conveyancing solicitors that we work with undertake Basingstoke 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 conveyancing solicitor we work with provide it.
Basingstoke Lease Extension Case Summaries:
Tyler, Basingstoke, Hampshire
Last October Tyler, came perilously close to the eighty-year mark with the lease on his basement flat in Basingstoke. In buying his property two decades ago, the unexpired term was of no bearing. by good luck, it dawned on him that he needed to take action soon on a lease extension. Tyler was able to extend his lease at the eleventh hour last June. Tyler and the landlord who owned the flat above ultimately settled on the final figure of £5,000 . If the lease had fallen lower than eighty years, the price would have gone up by at least £1,075.
Basingstoke case:
In 2012 we were called by Mr Leon Gunderson who, having owned a basement flat in Basingstoke in March 2000. The dilemma was if we could approximate the price would be to extend the lease by a further 90 years. Comparable residencies in Basingstoke with 100 year plus lease were in the region of £205,000. The mid-range ground rent payable was £50 invoiced quarterly. The lease expired on 21 April 2104. Taking into account 78 years outstanding we calculated the premium to the landlord for the lease extension to be within £7,600 and £8,800 exclusive of costs.
Basingstoke case:
Mr and Mrs. J Thompson completed a studio apartment in Basingstoke in September 1999. We are asked if we could shed any light on how much (roughly) compensation to the landlord would likely be for a 90 year lease extension. Comparable residencies in Basingstoke with a long lease were valued about £267,600. The mid-range amount of ground rent was £65 billed monthly. The lease elapsed on 6 August 2093. Given that there were 67 years unexpired we estimated the compensation to the freeholder to extend the lease to be between £14,300 and £16,400 not including fees.