The market value of Broadway leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of a lease extension can increase significantly once the remaining term is below than eighty years
It is generally accepted that a property with over 100 years unexpired lease term is worth roughly the same as a freehold. Where an additional ninety years added to any lease with more than 30 years left, the premises will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Chelsea 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. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The lawyers that we work with handle Broadway 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 lawyer we work with provide it.
Last Spring Lewis, came precariously close to the eighty-year mark with the lease on his garden apartment in Broadway. Having purchased his flat 18 years previously, the length of the lease was of minimal concern. Fortunately, he became aware that he needed to take action soon on Extending the lease. Lewis extended the lease just under the wire in June. Lewis and the landlord who owned the flat above ultimately settled on a premium of £5,000 . If he had missed the deadline, the premium would have escalated by a minimum £875.
In 2014 we were approached by Dr Lucy Adams who, having purchased a ground floor flat in Broadway in September 2003. The question was if we could approximate the premium could be for a ninety year lease extension. Comparable premises in Broadway with 100 year plus lease were valued about £198,800. The mid-range ground rent payable was £55 invoiced quarterly. The lease ended in 2080. Having 55 years left we estimated the compensation to the landlord for the lease extension to be within £33,300 and £38,400 not including expenses.
Last month we were approach by Dr Michael Cox , who purchased a studio apartment in Broadway in March 2010. We are asked if we could shed any light on how much (approximately) compensation to the landlord would be for a ninety year extension to my lease. Comparable premises in Broadway with an extended lease were in the region of £300,000. The mid-range ground rent payable was £50 billed yearly. The lease lapsed on 5 September 2100. Considering the 75 years left we calculated the compensation to the landlord for the lease extension to be between £8,600 and £9,800 plus legals.