It’s an underpublicised certainty that a Bow Street residential lease is a deteriorating asset. As the lease term reduces so does the value of the property. 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 Bow Street property prices.Where your lease has approximately ninety 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 under 80 years - otherwise a higher premium will be due. Most leasehold owners in Bow Street will be able to extend under the legislation; however a lawyer should be able to confirm whether you are eligibility. In some cases you may not qualify. There are also strict timeframes and procedures to be adhered to once the process is instigated and you will need to be guided by your lawyer from beginning to end of the process.
It is generally accepted that a residential leasehold with in excess of one hundred years remaining is worth approximately the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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 remaining from the start of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. |
The conveyancers that we work with procure Bow Street 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.
In 2014 Ben, started to get close to the 80-year mark with the lease on his studio flat in Bow Street. In buying his home two decades ago, the lease term was of minimal significance. by good luck, it dawned on him that he needed to take action soon on Extending the lease. Ben was able to extend his lease just in the nick of time last July. Ben and the freeholder in the end settled on an amount of £6,000 . If the lease had descended lower than eighty years, the premium would have escalated by a minimum £1,025.
In 2011 we were contacted by Mr Stanley Kelly who, having purchased a basement apartment in Bow Street in June 2011. We are asked if we could estimate the compensation to the landlord would be for a 90 year extension to my lease. Identical homes in Bow Street with an extended lease were in the region of £193,400. The average amount of ground rent was £65 invoiced quarterly. The lease terminated in 2084. Considering the 59 years as a residual term we calculated the compensation to the landlord for the lease extension to be between £21,900 and £25,200 exclusive of expenses.
Mrs A López was assigned a lease of a purpose-built apartment in Bow Street in May 2002. The question was if we could estimate the price would likely be for a ninety year lease extension. Comparative residencies in Bow Street with a long lease were valued around £250,000. The average amount of ground rent was £50 collected quarterly. The lease expired on 18 February 2095. Taking into account 70 years left we calculated the premium to the freeholder for the lease extension to be within £9,500 and £11,000 not including costs.