Billingham Lease Extension - Free Consultation

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Top reasons for Billingham lease extension


Top reasons for lease extension now:

Increase your lease and increase your Billingham property value

When it comes to domestic leasehold premises in Billingham, you effectively rent it for a certain period of time. Modern flat leases are usually granted for 99 years or 125. Even though this may appear like a lengthy period of time, you may think about a lease extension sooner as opposed to later. The general rule is that the shorter the number of years is the cost of extending the lease increases markedly especially when there are less than eighty years left. Residents in Billingham with a lease drawing near to 81 years unexpired should seriously consider extending it without delay. When a lease has fewer than 80 years outstanding, under the current legislation the freeholder is entitled to calculate and charge a greater premium, assessed on a technical computation, known as “marriage value” which is due.

Billingham property with a lease extension is almost the same value as a freehold

It is generally accepted that a residential leasehold with more than 100 years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional 90 years added to any lease with more than 30 years left, the property will be equivalent in value to a freehold for many years in the future.

Lending institutions will not loan monies on a short lease

The propensity since 2008 has been for lenders to tighten lending requirements across the board - this has extended to the property over which the home loan is to be granted. This has meant the unexpired lease term required by banks has increased. Historically banks would grant a mortgage on a lease with 25 years plus the term of the loan - typically fifty year leases but those requirements evolved by the requirement for lengthy leases - many now have a minimum term of 75 years as standard.

Lender Requirement
Barnsley Building Society 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term.
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.
Leeds Building Society 85 years remaing from the start 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.
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 Originations (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 Originations (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 0.5% 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 Originations):
- 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 Originations (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
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to 5 years
- 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

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- 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 0.5% 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 Originations):
- 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
- Starting Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than 5 years
- Ground Rent escalation less than or equal to RPI

* 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

Get in touch with one of our Billingham lease extension solicitors or enfranchisement solicitors

The conveyancers that we work with handle Billingham 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.

Billingham Lease Extension Case Studies:

Dexter, Billingham, County Durham

Half a year ago Dexter, came seriously near to the eighty-year mark with the lease on his ground floor apartment in Billingham. Having purchased his property two decades ago, the lease term was of minimal concern. Fortunately, he noticed he needed to take steps soon on a lease extension. Dexter extended the lease just under the wire in August. Dexter and the freeholder via the managing agents ultimately agreed on an amount of £5,500 . If he not met the deadline, the price would have escalated by at least £1,050.

Billingham case:

Mr and Mrs. F Norbert moved into a one bedroom flat in Billingham in May 2009. The question was if we could shed any light on how much (roughly) compensation to the landlord could be for a ninety year extension to my lease. Comparative homes in Billingham with a long lease were worth £233,200. The mid-range amount of ground rent was £60 billed every twelve months. The lease ended in 2082. Taking into account 61 years as a residual term we estimated the compensation to the freeholder for the lease extension to be between £22,800 and £26,400 not including expenses.

Billingham case:

In 2009 we were contacted by Mr and Mrs. G Mercier who, having purchased a basement flat in Billingham in August 1998. The dilemma was if we could approximate the price would likely be to extend the lease by an additional years. Similar properties in Billingham with a long lease were valued around £171,800. The average ground rent payable was £55 invoiced quarterly. The lease elapsed in 2071. Taking into account 50 years remaining we calculated the compensation to the freeholder for the lease extension to be within £33,300 and £38,400 not including costs.