Byker and Walker leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease gets more expensive. It is the case that most Byker and Walker tenants have the right to extend their lease by an additional 90 years in accordance with the 1993 Leasehold Reform Act. If you are a leasehold owner in Byker and Walker you must see if your lease has between 70 and ninety years remaining. In particular once the remaining lease term slips under 80 years, the amount payable for any lease extension sharply increases as part of the premium you will incur is what is known as a marriage value
It is conventional wisdom that a property with in excess of one hundred years unexpired lease term is worth approximately the same as a freehold. Where an further 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for decades to come.
| 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; |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Irrespective of whether you are a tenant or a landlord in Byker and Walker,the lease extension solicitors that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Byker and Walker valuers.
Elijah owned a high value flat in Byker and Walker being sold with a lease of just over 72 years unexpired. Elijah on an informal basis spoke with his freeholder being a well known London-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years subject to a rise in the rent to £100 annually. Ordinarily, ground rent would not be payable on a lease extension were Elijah to exercise his statutory right. Elijah procured expert legal guidance and was able to make a more informed decision and deal with the matter and ending up with a market value flat.
In 2012 we were approached by Dr Teddy Murphy who, having owned a purpose-built flat in Byker and Walker in October 2004. We are asked if we could approximate the compensation to the landlord would be for a ninety year lease extension. Similar residencies in Byker and Walker with a long lease were worth £183,600. The mid-range ground rent payable was £65 collected annually. The lease expired on 21 October 2082. Taking into account 57 years unexpired we calculated the compensation to the freeholder for the lease extension to be between £28,500 and £33,000 not including legals.
Last year we were approach by Mr and Mrs. C Thompson , who was assigned a lease of a studio flat in Byker and Walker in November 2009. We are asked if we could estimate the premium would likely be to extend the lease by 90 years. Comparative properties in Byker and Walker with an extended lease were worth £245,000. The mid-range amount of ground rent was £50 collected monthly. The lease ran out in 2093. Given that there were 68 years unexpired we estimated the premium to the landlord to extend the lease to be between £9,500 and £11,000 not including fees.