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Top reasons for Chatteris lease extension


Top reasons for lease extension now:

A Chatteris leasehold property depreciates with the years remaining on the lease.

Chatteris 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. It is the case that most Chatteris tenants have the right to extend their lease by an additional 90 years in accordance with the 1993 Leasehold Reform Act. Where you are a leasehold owner in Chatteris you must investigate if your lease has between 70 and ninety years left. There are good reasons why a Chatteris leaseholder with a lease having around 80 years left should take steps to ensure that a lease extension is effected without delay

Chatteris property with a lease extension has roughly the same value as a freehold

It is conventional wisdom that a property with in excess of one hundred years unexpired lease term is worth approximately the same as a freehold. Where an additional 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years in the future.

Banks and Building Societies may not finance a property with a short lease

Mortgage lenders have specific criteria when loaning monies secured on leasehold property. Some will simply refrain from lending at all once an unexpired lease term slips below a specified unexpired lease term. Many Mortgage lenders will not consider property with an unexpired term of less than seventy years suitable security. As well as this being important when selling, it is also relevant where you are intending to remortgage your Chatteris property.

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 Mortgage term plus 30 years subject to an overall minimum term of 70 years
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to 5 years
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- Starting Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than 5 years
- Ground Rent escalation less than or equal to RPI

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years
Virgin 85 years at the time of completion. If it's less, we require it to be extended on or before completion.

What makes us experts in Chatteris lease extensions?

Lease extensions in Chatteris can be a difficult process. We recommend you get guidance from a conveyancer and surveyor with experience in lease extensions.

We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge dealing with Chatteris lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.

Chatteris Lease Extension Example Cases:

Phoebe, Chatteris, Cambridgeshire,

Following lengthy discussions with the landlord of her first floor apartment in Chatteris, Phoebe initiated the lease extension process just as the lease was nearing the critical eighty-year deadline. The transaction was concluded in January 2005. The landlord’s charges were restricted to a tad over 550 pounds.

Chatteris case:

Mr and Mrs. J Lambert acquired a purpose-built apartment in Chatteris in April 1998. We are asked if we could approximate the price could be to extend the lease by ninety years. Identical flats in Chatteris with an extended lease were in the region of £218,400. The average ground rent payable was £60 collected annually. The lease came to a finish in 2079. Considering the 59 years outstanding we approximated the compensation to the landlord for the lease extension to be within £27,600 and £31,800 plus fees.

Chatteris case:

Last Winter we were contacted by Mr and Mrs. U Evans , who took over the lease of a first floor flat in Chatteris in August 2005. We are asked if we could shed any light on how much (roughly) premium could be for a ninety year lease extension. Similar properties in Chatteris with an extended lease were valued around £205,000. The average amount of ground rent was £50 collected yearly. The lease ran out on 27 February 2099. Given that there were 79 years unexpired we estimated the compensation to the landlord for the lease extension to be within £8,600 and £9,800 plus expenses.