It’s a harsh truth that a Birkenshaw 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 Birkenshaw property prices.Where your lease has approximately 90 years left, 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 dips below 80 years - otherwise a higher amount will be payable. The majority of leasehold owners in Birkenshaw will be able to extend under the legislation; however a lawyer should be able to clarify if you are eligibility. In some cases you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process is initiated and you will need to be guided by your conveyancing solicitor from beginning to end of the formalities.
It is conventional wisdom that a residential leasehold with more than 100 years remaining is worth approximately the same as a freehold. Where an additional 90 years added to any lease with more than 45 years remaining, the property will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| 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; |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset 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. |
Engaging our service gives you enhanced control over the value of your Birkenshaw leasehold, as your property will be more valuable and marketable in terms of lease length should you wish to sell. The conveyancers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Last October Daniel, started to get close to the eighty-year threshold with the lease on his purpose- built apartment in Birkenshaw. Having bought his home 19 years ago, the length of the lease was of no concern. As luck would have it, it dawned on him that he needed to take action soon on Extending the lease. Daniel extended the lease just ahead of time last January. Daniel and the freeholder via the managing agents subsequently settled on the final figure of £6,000 . If the lease had fallen to less than 80 years, the price would have escalated by at least £1,075.
In 2011 we were phoned by Mrs Ellie François who, having owned a basement apartment in Birkenshaw in September 2007. The question was if we could shed any light on how much (roughly) price could be to extend the lease by an additional years. Comparable flats in Birkenshaw with 100 year plus lease were worth £295,000. The average ground rent payable was £45 collected yearly. The lease concluded on 7 January 2100. Given that there were 75 years left we approximated the compensation to the landlord for the lease extension to be between £8,600 and £9,800 plus costs.
Last month we were contacted by Dr Jessica Mason , who acquired a studio apartment in Birkenshaw in September 2003. The dilemma was if we could approximate the price would be to extend the lease by 90 years. Identical premises in Birkenshaw with 100 year plus lease were worth £250,400. The mid-range amount of ground rent was £65 collected monthly. The lease ran out on 17 February 2089. Having 64 years unexpired we calculated the compensation to the freeholder for the lease extension to be within £19,000 and £22,000 exclusive of expenses.