Carmel residential property owned on a long lease is a depreciating asset because a leaseholder merely owns the property for a period of years.
Leasehold properties in Carmel with over 100 years left on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and estate charges justify it.
| 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; |
| Halifax | Minimum 70 years from the date of the mortgage. |
| 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. |
| 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 |
Regardless of whether you are a tenant or a freeholder in Carmel,the lease extension solicitors that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Carmel valuers.
Sam owned a conversion apartment in Carmel being marketed with a lease of fraction over 61 years outstanding. Sam on an informal basis approached his freeholder being a well known London-based freehold company for a lease extension. The freeholder indicated a willingness to grant an extension taking the lease to 125 years on the basis of an increased rent to £100 per annum. No ground rent would be payable on a lease extension were Sam to invoke his statutory right. Sam procured expert advice and was able to make a more informed decision and handle with the matter and sell the property.
In 2014 we were called by Dr L Martinez who, having completed a one bedroom apartment in Carmel in October 1999. The question was if we could estimate the price would be for a ninety year extension to my lease. Similar properties in Carmel with 100 year plus lease were valued about £206,200. The mid-range amount of ground rent was £60 billed quarterly. The lease finished in 2081. Given that there were 56 years remaining we approximated the compensation to the freeholder for the lease extension to be within £32,300 and £37,400 not including expenses.
In 2012 we were phoned by Dr B Cox who, having moved into a studio flat in Carmel in June 2006. The question was if we could approximate the price would be to extend the lease by 90 years. Identical homes in Carmel with 100 year plus lease were worth £300,000. The mid-range amount of ground rent was £50 collected quarterly. The lease terminated on 6 September 2101. Taking into account 76 years unexpired we estimated the premium to the freeholder to extend the lease to be within £8,600 and £9,800 plus professional charges.