Unfortunately that a Burwell residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is taken for granted in the early years due to the reduction being disguised by increases in the Burwell property prices.Once your lease nears 85ish years, you should start thinking about 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 eighty years - otherwise a higher amount will be due. Most flat owners in Burwell will be able to extend under the legislation; however a lawyer should be able to clarify whether you are eligibility. In some situations you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process has commenced and you will need to be guided by your lawyer throughout the process.
It is conventional wisdom that a residential leasehold with over 100 years remaining is worth roughly the equivalent as a freehold. Where an additional ninety years added to any lease with more than 30 years remaining, the premises will be equivalent in value to a freehold for many years in the future.
| 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. |
| 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. |
| Godiva Mortgages | 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. |
Engaging our service will provide you increased control over the value of your Burwell leasehold, as your property will be more valuable and saleable in relation to the lease length should you want to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
During the course of the last few months Archie, came very near to the 80-year mark with the lease on his one bedroom apartment in Burwell. In buying his home two decades ago, the length of the lease was of minimal importance. by good luck, he became aware that he needed to take steps soon on a lease extension. Archie arranged for a lease extension just under the wire last September. Archie and the freeholder via the managing agents in the end settled on an amount of £5,000 . If the lease had descended lower than 80 years, the amount would have escalated by at least £1,050.
In 2011 we were phoned by Ms Bethany Smith who, having completed a purpose-built flat in Burwell in July 1998. The dilemma was if we could estimate the compensation to the landlord would likely be to extend the lease by ninety years. Identical properties in Burwell with an extended lease were valued about £233,200. The average ground rent payable was £60 collected monthly. The lease expired in 2086. Considering the 61 years unexpired we approximated the compensation to the freeholder for the lease extension to be within £22,800 and £26,400 exclusive of expenses.
Last Winter we were e-mailed by Mr and Mrs. K Sánchez , who took over the lease of a first floor apartment in Burwell in March 2003. The dilemma was if we could approximate the compensation to the landlord would likely be to extend the lease by an additional years. Comparable properties in Burwell with an extended lease were worth £166,800. The average ground rent payable was £55 collected monthly. The lease came to a finish in 2075. Having 50 years left we approximated the premium to the freeholder to extend the lease to be between £32,300 and £37,400 exclusive of professional charges.