Canford Cliffs 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 the lease becomes more expensive. It is the case that most Canford Cliffs tenants have the right to extend their lease by an additional 90 years by virtue of the 1993 Leasehold Reform Act. Where you are a leasehold owner in Canford Cliffs you really ought to investigate if your lease has between 70 and ninety years left. In particular once the remaining lease term slips under 80 years, the premium due on any lease extension increases dramatically as part of the premium you pay is what is known as a marriage value
Leasehold premises in Canford Cliffs with over 100 years unexpired on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little upside in buying the freehold unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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. |
Retaining our service gives you enhanced control over the value of your Canford Cliffs leasehold, as your property will be more valuable and saleable in terms of lease length should you wish to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
In recent months Mason, came very close to the eighty-year threshold with the lease on his leasehold flat in Canford Cliffs. In buying his property twenty years previously, the unexpired term was of minimal significance. Fortunately, he recognised he needed to take steps soon on Extending the lease. Mason extended the lease at the eleventh hour last April. Mason and the freeholder eventually settled on an amount of £5,500 . If the lease had fallen lower than 80 years, the amount would have become more costly by at least £950.
Ms T Scott was assigned a lease of a garden flat in Canford Cliffs in May 2004. We are asked if we could approximate the price could be to extend the lease by an additional years. Comparative properties in Canford Cliffs with 100 year plus lease were in the region of £290,000. The average amount of ground rent was £60 billed yearly. The lease expired in 2106. Taking into account 80 years left we approximated the compensation to the landlord for the lease extension to be within £13,300 and £15,400 exclusive of expenses.
Mr W Fournier owned a garden apartment in Canford Cliffs in July 1998. The question was if we could approximate the compensation to the landlord would likely be for a ninety year lease extension. Comparable flats in Canford Cliffs with 100 year plus lease were in the region of £200,800. The average amount of ground rent was £65 billed monthly. The lease expired on 18 August 2086. Given that there were 60 years as a residual term we estimated the compensation to the landlord for the lease extension to be within £20,900 and £24,200 not including costs.