Binstead leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease becomes more expensive. It is the case that most Binstead tenants have the right to extend their lease by an additional ninety years by virtue of the 1993 Leasehold Reform Act. If you are a leasehold owner in Binstead you really ought to check if your lease has between seventy and ninety years remaining. In particular once the remaining lease term slips under 80 years, the amount payable for any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
Leasehold premises in Binstead with over 100 years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| 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; |
| Godiva Mortgages | 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. |
| 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. |
Irrespective of whether you are a tenant or a landlord in Binstead,the lease extension lawyers that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Binstead valuers.
Last year Reuben, came dangerously close to the 80-year threshold with the lease on his two bedroom apartment in Binstead. In buying his property two decades ago, the unexpired term was of little importance. Thankfully, he recognised he needed to take action soon on Extending the lease. Reuben was able to extend his lease just under the wire last May. Reuben and the freeholder ultimately settled on an amount of £6,000 . If the lease had slid to less than 80 years, the sum would have gone up by at least £1,000.
In 2009 we were called by Mr and Mrs. O Carter who, having bought a first floor flat in Binstead in August 1999. We are asked if we could estimate the compensation to the landlord could be for a 90 year extension to my lease. Comparable flats in Binstead with 100 year plus lease were worth £168,800. The mid-range ground rent payable was £60 invoiced monthly. The lease terminated on 28 November 2081. Considering the 55 years outstanding we approximated the premium to the freeholder for the lease extension to be within £30,400 and £35,200 not including legals.
In 2013 we were contacted by Mr and Mrs. E Richardson who, having took over the lease of a newly refurbished flat in Binstead in June 2001. We are asked if we could estimate the compensation to the landlord could be for a 90 year extension to my lease. Identical residencies in Binstead with a long lease were valued around £235,200. The mid-range ground rent payable was £45 collected every twelve months. The lease terminated on 27 February 2092. Considering the 66 years remaining we approximated the premium to the freeholder for the lease extension to be between £12,400 and £14,200 exclusive of fees.