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Top reasons for Chesham Bois lease extension


Top reasons for lease extension now:

Increase your lease and increase your Chesham Bois property value

There is no doubt about it a leasehold flat or house in Chesham Bois is a wasting asset as a result of the shortening lease. If the lease has, in excess of 125 years remaining then this decrease may be fractional however there will become a point in time when a lease has less than eighty years left as part of the premium you will incur is what is known as a marriage value. This could increase sharply the cost. It is the primary rational as to why you should extend the lease sooner than later. The majority of flat owners in Chesham Bois will meet the qualifying criteria; however a conveyancing solicitor should be able to advise whether you qualify to extend your lease. In limited situations you may not qualify, the most common reason being that you have not been the owner of the property for two years.

An extended lease has roughly the same value as a freehold

Leasehold residencies in Chesham Bois with in excess of one hundred years outstanding on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little upside in purchasing the freehold unless savings on ground rent and service charges warrant it.

Mortgage lenders may decide not to grant a mortgage on a short lease

The propensity since over the last decade has been for mortgage companies to tighten lending requirements across the board - this has extended to the property over which the home loan is to be granted. This has resulted in the unexpired lease term required by banks has increased. Historically mortgage companies were content with 25 years plus the term of the loan - typically 50 year leases but those requirements evolved by the requirement for longer and longer leases - many use a minimum term of 75 years as a prerequisite.

Lender Requirement
Barnsley Building Society 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term.
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
TSB Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.
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
Yorkshire Building Society 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.

Get in touch with one of our Chesham Bois lease extension solicitors or enfranchisement solicitors

Irrespective of whether you are a tenant or a landlord in Chesham Bois,the lease extension experts that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Chesham Bois valuers.

Chesham Bois Lease Extension Case Studies:

Connor, Chesham Bois, Buckinghamshire

In recent months Connor, came dangerously near to the eighty-year mark with the lease on his studio apartment in Chesham Bois. Having purchased his flat 18 years previously, the length of the lease was of little interest. by good luck, he realised he would imminently be paying an inflated amount for Extending the lease. Connor was able to extend his lease just in the nick of time in May. Connor and the landlord who owned the flat above ultimately agreed on sum of £6,000 . If he not met the deadline, the amount would have increased by a minimum £1,000.

Chesham Bois case:

Dr B Michel completed a one bedroom flat in Chesham Bois in September 1998. The question was if we could estimate the price would be to prolong the lease by 90 years. Similar flats in Chesham Bois with a long lease were valued about £265,000. The average ground rent payable was £50 billed monthly. The lease expiry date was on 2 July 2094. Considering the 73 years left we estimated the premium to the landlord to extend the lease to be between £9,500 and £11,000 not including fees.

Chesham Bois case:

Mr and Mrs. F Scott completed a one bedroom flat in Chesham Bois in June 2006. We are asked if we could approximate the compensation to the landlord could be to prolong the lease by 90 years. Similar residencies in Chesham Bois with a long lease were valued around £264,000. The mid-range amount of ground rent was £60 invoiced yearly. The lease ended on 14 July 2074. Given that there were 53 years left we estimated the premium to the freeholder to extend the lease to be within £37,100 and £42,800 not including costs.