Unfortunately that a Canvey Island residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the reduction being disguised by increases in the Canvey Island property market.Once your lease gets to 85ish years, you should start considering 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 falls lower than 80 years - otherwise a higher premium will be payable. The majority of leasehold owners in Canvey Island will be able to extend under the legislation; however a conveyancing solicitor will be able to clarify whether you are eligibility. In some situations you may not qualify. There are also strict timeframes and procedures to follow once the process has commenced and you will need to be guided by your lawyer for the duration of the process.
Leasehold premises in Canvey Island with in excess of 100 years unexpired on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and service charges warrant 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 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
Engaging our service will provide you better control over the value of your Canvey Island leasehold, as your property will be more valuable and saleable in relation to the lease length should you want to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Last year Alexander, came very close to the 80-year threshold with the lease on his ground floor flat in Canvey Island. Having purchased his property 19 years ago, the length of the lease was of no significance. Thankfully, it dawned on him that he needed to take steps soon on a lease extension. Alexander arranged for a lease extension just under the wire in August. Alexander and the freeholder via the management company in the end settled on a premium of £5,500 . If the lease had dropped lower than eighty years, the price would have increased by at least £1,150.
Last year we were approach by Mrs Rhiannon François , who took over the lease of a garden flat in Canvey Island in July 2005. The dilemma was if we could approximate the compensation to the landlord could be for a ninety year extension to my lease. Comparative homes in Canvey Island with a long lease were in the region of £280,000. The average ground rent payable was £45 billed annually. The lease finished on 27 August 2095. Taking into account 70 years outstanding we calculated the premium to the landlord to extend the lease to be within £12,400 and £14,200 plus professional charges.
Mr Freddie Lewis took over the lease of a first floor flat in Canvey Island in July 2005. The question was if we could approximate the compensation to the landlord would be for a ninety year lease extension. Identical homes in Canvey Island with an extended lease were in the region of £223,400. The average ground rent payable was £60 billed per annum. The lease expired in 2084. Given that there were 59 years unexpired we approximated the premium to the landlord to extend the lease to be between £27,600 and £31,800 plus costs.