Canton 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. The majority of owners of residential leasehold property in Canton enjoy rights under legislation to extend the terms of their leases. Where you are a leasehold owner in Canton you must investigate if your lease has between seventy and 90 years remaining. In particular once the remaining lease term slips under eighty years, the amount payable for any lease extension sharply increases as part of the premium you pay is what is known as a marriage value
It is conventional wisdom that a property with more than one hundred years remaining is worth roughly the same as a freehold. Where an further ninety years added to all but the shortest lease, the premises will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| 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. |
| 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. |
| 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. |
The lawyers that we work with handle Canton 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 conveyancing solicitor we work with provide it.
Trailing unsuccessful discussions with the landlord of her first floor flat in Canton, Leah initiated the lease extension process as the 80 year threshold was rapidly advancing. The transaction was concluded in February 2005. The freeholder’s charges were kept to an absolute minimum.
Last year we were e-mailed by Mr and Mrs. A Smith , who owned a ground floor apartment in Canton in September 2006. The question was if we could approximate the price would be to prolong the lease by 90 years. Similar residencies in Canton with an extended lease were worth £267,600. The mid-range ground rent payable was £65 collected per annum. The lease lapsed in 2093. Having 67 years unexpired we approximated the compensation to the freeholder for the lease extension to be between £14,300 and £16,400 not including legals.
Mr and Mrs. P Davis completed a first floor apartment in Canton in June 2011. The question was if we could estimate the compensation to the landlord would be for a 90 year lease extension. Comparable residencies in Canton with 100 year plus lease were valued around £206,200. The average amount of ground rent was £55 invoiced monthly. The lease elapsed in 2082. Taking into account 56 years outstanding we approximated the premium to the freeholder for the lease extension to be between £31,400 and £36,200 exclusive of legals.