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Top reasons for Bridport lease extension


Why you should commence your Bridport lease extension today:

A Bridport lease depreciates with the years remaining on the lease.

Owning a flat usually means owning a lease of the property, which has a finite term of years. The lease will ordinarily be granted for a set period of time , usually 99 or 125 years, although we have seen longer and shorter terms in Bridport. Inevitably, the term of lease left shortens over time. This is often overlooked and only becomes a problem when the flat or house needs to be disposed of 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. Qualifying leaseholders in Bridport have the legal entitlement to extend the lease for an additional 90 years under legislation. You should give careful consideration before putting off your Bridport lease extension. Holding off that expense now simply increases the price you will ultimately incur for a lease extension

An extended lease has roughly the same value as a freehold

Leasehold properties in Bridport with over 100 years left on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such circumstances there is often little upside in buying the freehold unless savings on ground rent and maintenance charges warrant it.

Lenders may decide not to finance a property with a short lease

The propensity since the credit crunch has been for lenders to tighten lending criteria across the board - this has extended to the property over which the home loan is to be granted. This has resulted in the unexpired lease term required by banks has increased. Historically banks were content with 25 years plus the term of the loan - typically fifty year leases but those requirements evolved by the requirement for lengthy leases - many now have a minimum term of 75 years as a prerequisite.

Lender Requirement
Barclays plc Mortgage term plus 25 years provided that leases of less than 85 years are be referred to us for approval.
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.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to 5 years
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- Starting Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than 5 years
- Ground Rent escalation less than or equal to RPI

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years
Virgin 85 years at the time of completion. If it's less, we require it to be extended on or before completion.

Why use us for your lease extension in Bridport?

Lease extensions in Bridport can be a difficult process. We recommend you procure guidance from a lawyer and valuer with experience in this area.

We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge procuring Bridport lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.

Bridport Lease Extension Case Summaries:

Naomi, Bridport, Dorset,

In the wake of 9 months of lengthy correspondence with the landlord of her basement flat in Bridport, Naomi started the lease extension process as the 80 year threshold was quickly advancing. The lease extension was finalised in October 2011. The freeholder’s costs were restricted to less than 600 pounds.

Bridport case:

In 2010 we were approached by Mr and Mrs. B Wright who, having owned a studio apartment in Bridport in January 1998. The question was if we could estimate the compensation to the landlord would likely be to extend the lease by an additional years. Similar flats in Bridport with a long lease were valued about £201,200. The mid-range amount of ground rent was £55 billed every twelve months. The lease concluded on 1 July 2077. Having 56 years as a residual term we approximated the compensation to the freeholder to extend the lease to be within £31,400 and £36,200 plus costs.

Bridport case:

Last July we were approach by Dr S Richardson , who completed a recently refurbished flat in Bridport in November 1995. The dilemma was if we could approximate the premium could be for a ninety year lease extension. Similar properties in Bridport with 100 year plus lease were in the region of £300,000. The mid-range ground rent payable was £50 invoiced quarterly. The lease expiry date was in 2097. Given that there were 76 years outstanding we approximated the premium to the freeholder to extend the lease to be between £8,600 and £9,800 exclusive of fees.