It’s an underpublicised certainty that a Chard residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the early years due to the loss of value being disguised by increases in the Chard property market.Once your lease gets to 85ish years, you need to start thinking about 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 under eighty years - otherwise a higher premium will be due. Most leasehold owners in Chard will be able to extend under the legislation; however a lawyer will be able to confirm whether you are eligibility. In some cases you may not be entitled. There are also strict timetables and procedures to follow once the process has commenced and you will need to be guided by your lawyer from beginning to end of the formalities.
It is conventional wisdom that a property with more than one hundred years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 45 years remaining, the property will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| 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 |
The conveyancing solicitors that we work with handle Chard 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.
Last year Jamie, came seriously close to the 80-year mark with the lease on his basement flat in Chard. In buying his property 19 years ago, the lease term was of minimal relevance. by good luck, he realised he needed to take steps soon on a lease extension. Jamie extended the lease just under the wire in April. Jamie and the landlord eventually agreed on an amount of £6,000 . If the lease had dipped to less than 80 years, the premium would have gone up by a minimum £1,075.
In 2011 we were phoned by Ms F Wood who, having moved into a garden apartment in Chard in February 2003. We are asked if we could shed any light on how much (roughly) price would be to prolong the lease by 90 years. Identical homes in Chard with a long lease were in the region of £183,600. The mid-range amount of ground rent was £65 billed quarterly. The lease concluded on 4 February 2083. Given that there were 57 years outstanding we calculated the compensation to the landlord to extend the lease to be between £28,500 and £33,000 exclusive of legals.
Mr and Mrs. G Simon completed a garden apartment in Chard in January 2007. The dilemma was if we could shed any light on how much (roughly) premium would be to extend the lease by an additional years. Comparative flats in Chard with a long lease were in the region of £250,000. The mid-range amount of ground rent was £50 invoiced quarterly. The lease expired on 13 August 2094. Taking into account 68 years remaining we approximated the compensation to the freeholder for the lease extension to be within £9,500 and £11,000 not including expenses.