Cambridge leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease gets more expensive. Legislation has been in place for sometime now allowing qualifying Cambridge residential leaseholders to extend the terms of long leases. Where you are a leasehold owner in Cambridge you would be well advised to investigate if your lease has between 70 and ninety years remaining. There are compelling reasons why a Cambridge flat owner with a lease having around 80 years unexpired should take steps to ensure that a lease extension is effected without delay
It is conventional wisdom that a property with in excess of 100 years unexpired lease term is worth approximately the same as a freehold. Where an additional 90 years added to any lease with more than 35 years left, the property 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. |
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset of the mortgage. |
Retaining our service gives you enhanced control over the value of your Cambridge leasehold, as your property will be more valuable and saleable in relation to the lease length should you decide to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Jackson owned a 2 bedroom apartment in Cambridge being marketed with a lease of fraction over 59 years left. Jackson informally spoke with his landlord a well known London-based freehold company and enquired on a premium to extend the lease. The freeholder was keen to grant an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £100 yearly. Ordinarily, ground rent would not be due on a lease extension were Jackson to exercise his statutory right. Jackson obtained expert advice and was able to make a more informed decision and deal with the matter and ending up with a market value flat.
In 2011 we were approached by Mr L Stewart who, having bought a ground floor apartment in Cambridge in September 2001. We are asked if we could estimate the premium would be for a 90 year lease extension. Comparable flats in Cambridge with 100 year plus lease were valued around £210,600. The mid-range amount of ground rent was £45 collected monthly. The lease lapsed on 27 April 2088. Given that there were 62 years remaining we calculated the premium to the landlord for the lease extension to be within £18,100 and £20,800 not including professional charges.
Last Spring we were e-mailed by Dr Joseph Rivera , who purchased a basement apartment in Cambridge in June 2008. We are asked if we could estimate the premium would be to prolong the lease by a further 90 years. Comparative homes in Cambridge with 100 year plus lease were valued about £260,000. The average ground rent payable was £50 invoiced annually. The lease expired in 2099. Considering the 73 years as a residual term we estimated the compensation to the landlord for the lease extension to be within £9,500 and £11,000 exclusive of expenses.