Owning a flat usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. This lease will usually be granted for a set period of time , ordinarily 99 or 125 years, although we have come across longer and shorter terms in Birstall. Inevitably, the term of lease left shortens as time goes by. This may slip by relatively unnoticed when the property needs to be sold or refinanced. The shorter the lease the lower the value of the property and the more expensive it will be to procure a lease extension. Eligible long lease owners in Birstall have the right to extend the lease for an additional ninety years in accordance with statute. Please give due attention before putting off your Birstall lease extension. Holding off the cost now simply increases the price you will ultimately incur for a lease extension
It is conventional wisdom that a property with over 100 years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for decades to come.
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Lloyds TSB Scotland | 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Engaging our service gives you better control over the value of your Birstall leasehold, as your property will be more valuable and saleable in relation to the lease length should you wish to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Last October Jamie, started to get close to the 80-year mark with the lease on his first floor apartment in Birstall. Having purchased his home 18 years previously, the length of the lease was of little concern. Fortunately, it dawned on him that he would imminently be paying way over the odds for Extending the lease. Jamie arranged for a lease extension just in the nick of time last March. Jamie and the freeholder via the management company eventually settled on sum of £6,000 . If the lease had fallen lower than eighty years, the amount would have become more exhorbitant by at least £1,100.
Dr Eli Roux was assigned a lease of a first floor apartment in Birstall in January 1999. The dilemma was if we could approximate the compensation to the landlord would be to prolong the lease by ninety years. Comparative properties in Birstall with 100 year plus lease were valued about £290,000. The average amount of ground rent was £45 collected every twelve months. The lease ran out on 21 October 2098. Taking into account 73 years unexpired we approximated the premium to the freeholder for the lease extension to be between £9,500 and £11,000 plus fees.
Mr R Reed moved into a one bedroom flat in Birstall in October 1999. We are asked if we could estimate the premium would be for a ninety year extension to my lease. Similar properties in Birstall with 100 year plus lease were worth £240,600. The average ground rent payable was £60 billed monthly. The lease came to a finish on 10 April 2087. Taking into account 62 years remaining we approximated the premium to the landlord for the lease extension to be within £21,900 and £25,200 plus expenses.