For those whose Chard flat is held on a long lease, the message is clear – if no remedial action is taken, the property will eventually revert to your landlord, leaving you empty-handed. The shorter the lease the less it is worth and the more it will cost to extend the lease.
It is conventional wisdom that a property with in excess of 100 years unexpired lease term is worth roughly the same as a freehold. Where an further ninety years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The lawyers 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 conveyancer we work with provide it.
Following lengthy correspondence with the freeholder of her studio flat in Chard, Erin commenced the lease extension process as the eighty year threshold was rapidly nearing. The legal work was finalised in May 2008. The landlord’s costs were kept to an absolute minimum.
Last Christmas we were contacted by Mr and Mrs. T Harris , who owned a newly refurbished apartment in Chard in August 2000. The question was if we could approximate the price would likely be to extend the lease by an additional years. Similar residencies in Chard with an extended lease were valued around £215,600. The average ground rent payable was £45 invoiced quarterly. The lease ended on 18 June 2087. Having 62 years unexpired we calculated the compensation to the freeholder to extend the lease to be within £18,100 and £20,800 plus expenses.
Last month we were approach by Mr and Mrs. R Hill , who moved into a basement apartment in Chard in July 2000. We are asked if we could shed any light on how much (approximately) compensation to the landlord would be to prolong the lease by an additional years. Comparable flats in Chard with an extended lease were in the region of £265,000. The mid-range amount of ground rent was £50 collected monthly. The lease lapsed in 2098. Having 73 years unexpired we approximated the premium to the landlord for the lease extension to be between £9,500 and £11,000 not including legals.