Bowthorpe leases on residential properties are gradually losing value. Where your lease has approximately 90 years left, you should start considering the need for a lease extension. If lease term falls under eighty years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add to the property. Flat owners in Bowthorpe will usually qualify for a lease extension; however It would be wise to check with a lawyer to confirm if you qualify. In certain cases you may not be entitled. There are prescribed deadlines and procedures to follow once the process is triggered so it’s sensible to be guided by a conveyancing solicitor during the process.
It is generally considered that a property with over 100 years unexpired lease term is worth roughly the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| 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. |
Engaging our service will provide you better control over the value of your Bowthorpe leasehold, as your property will be more valuable and saleable in terms of lease length should you decide 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 Luke, started to get close to the eighty-year mark with the lease on his purpose- built apartment in Bowthorpe. In buying his property two decades ago, the length of the lease was of no bearing. Luckily, he recognised he would imminently be paying way over the odds for Extending the lease. Luke extended the lease at the eleventh hour last August. Luke and the freeholder subsequently agreed on sum of £6,000 . If the lease had dropped lower than 80 years, the figure would have increased by a minimum £950.
In 2013 we were approached by Mr Aaron Nguyen who, having took over the lease of a basement flat in Bowthorpe in October 2003. We are asked if we could approximate the compensation to the landlord would be for a 90 year lease extension. Identical flats in Bowthorpe with 100 year plus lease were worth £300,000. The mid-range ground rent payable was £50 billed annually. The lease ran out on 11 June 2101. Considering the 76 years outstanding we estimated the compensation to the freeholder for the lease extension to be within £8,600 and £9,800 not including legals.
Mr Toby Mercier bought a ground floor apartment in Bowthorpe in November 2007. The dilemma was if we could estimate the premium could be for a 90 year lease extension. Similar premises in Bowthorpe with an extended lease were valued around £257,800. The mid-range ground rent payable was £65 billed monthly. The lease elapsed in 2090. Taking into account 65 years unexpired we approximated the premium to the landlord for the lease extension to be within £18,100 and £20,800 plus expenses.