Brown Edge leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease becomes more expensive. It is the case that most Brown Edge tenants have the right to extend their lease by an additional 90 years under the 1993 Leasehold Reform Act. Where you are a leasehold owner in Brown Edge you should investigate if your lease has between 70 and 90 years remaining. In particular once the remaining lease term slips under 80 years, the amount payable for any lease extension increases dramatically as an element of the premium you pay is what is known as a marriage value
It is generally accepted that a residential leasehold with in excess of one hundred years remaining is worth approximately the same as a freehold. Where an further ninety years added to any lease with more than 45 years unexpired, the property will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| 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. |
| 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. |
| 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. |
The conveyancers that we work with procure Brown Edge 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.
Last year Omar, came precariously close to the 80-year threshold with the lease on his first floor apartment in Brown Edge. In buying his flat two decades ago, the length of the lease was of minimal bearing. Fortunately, it dawned on him that he would imminently be paying an inflated amount for a lease extension. Omar was able to extend his lease at the eleventh hour in January. Omar and the freeholder via the management company in the end settled on sum of £6,000 . If the lease had descended to less than eighty years, the price would have gone up by a minimum £1,075.
In 2009 we were contacted by Dr Jonathan Jackson who, having took over the lease of a newly refurbished flat in Brown Edge in November 2010. We are asked if we could estimate the compensation to the landlord would be for a ninety year lease extension. Comparative residencies in Brown Edge with an extended lease were worth £264,000. The average amount of ground rent was £60 billed per annum. The lease finished on 13 April 2078. Taking into account 53 years left we estimated the premium to the landlord for the lease extension to be within £37,100 and £42,800 not including costs.
Last Christmas we were phoned by Dr L Cook , who completed a basement apartment in Brown Edge in January 2002. We are asked if we could estimate the compensation to the landlord would likely be to prolong the lease by 90 years. Similar flats in Brown Edge with a long lease were worth £218,000. The mid-range ground rent payable was £45 billed monthly. The lease ran out on 10 January 2088. Having 63 years as a residual term we calculated the compensation to the freeholder for the lease extension to be between £17,100 and £19,800 exclusive of expenses.