Chantry leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease becomes more expensive. Legislation has been in place for sometime now which permits qualifying Chantry residential leaseholders to extend the terms of long leases. Where you are a leasehold owner in Chantry you really ought to see if your lease has between 70 and 90 years remaining. In particular once the remaining lease term slips under 80 years, the premium due on any lease extension sharply increases as part of the premium you will incur is what is known as a marriage value
It is generally accepted that a residential leasehold with more than one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an further ninety years added to any lease with more than 35 years unexpired, the property will be worth the same as a freehold for many years in the future.
| 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; |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancers that we work with procure Chantry 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.
Following protracted correspondence with the freeholder of her basement apartment in Chantry, Kayleigh commenced the lease extension process just as the lease was nearing the all-important eighty-year threshold. The legal work was concluded in August 2007. The freeholder’s costs were negotiated to approximately 500 GBP.
In 2011 we were called by Mrs Y Kelly who, having purchased a studio flat in Chantry in June 1995. We are asked if we could estimate the premium would be for a 90 year extension to my lease. Comparable properties in Chantry with a long lease were in the region of £227,800. The mid-range amount of ground rent was £45 collected per annum. The lease expired in 2090. Given that there were 65 years outstanding we calculated the premium to the freeholder for the lease extension to be within £13,300 and £15,400 exclusive of fees.
Dr Rosie Williams acquired a purpose-built apartment in Chantry in September 2005. We are asked if we could approximate the compensation to the landlord would be for a 90 year lease extension. Similar flats in Chantry with an extended lease were valued around £275,000. The average ground rent payable was £55 billed monthly. The lease lapsed on 28 August 2101. Taking into account 76 years left we approximated the premium to the freeholder for the lease extension to be between £9,500 and £11,000 exclusive of legals.