For those whose Chorley property is held on a long lease, the message is clear – if nothing is done, 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 equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the property will be equivalent in value to a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Coventry Building Society | 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. |
| 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. |
The conveyancers that we work with undertake Chorley 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.
Half a year ago Ibrahim, started to get near to the 80-year threshold with the lease on his basement flat in Chorley. Having purchased his flat two decades ago, the lease term was of little relevance. Fortunately, he recognised he needed to take action soon on a lease extension. Ibrahim extended the lease just ahead of time last August. Ibrahim and the landlord who owned the flat above eventually agreed on a premium of £5,500 . If the lease had gone to less than 80 years, the amount would have escalated by a minimum £850.
Last Spring we were e-mailed by Dr P Morel , who owned a garden flat in Chorley in April 2006. The dilemma was if we could estimate the compensation to the landlord would be to extend the lease by ninety years. Similar properties in Chorley with a long lease were valued around £200,000. The average ground rent payable was £50 collected per annum. The lease finished on 23 April 2104. Given that there were 78 years as a residual term we approximated the premium to the landlord for the lease extension to be between £8,600 and £9,800 exclusive of costs.
In 2014 we were e-mailed by Dr Eli Howard who, having bought a purpose-built apartment in Chorley in February 2003. The question was if we could shed any light on how much (approximately) premium would be for a 90 year lease extension. Similar homes in Chorley with 100 year plus lease were worth £267,600. The mid-range amount of ground rent was £65 billed yearly. The lease expiry date was on 6 January 2093. Given that there were 67 years as a residual term we approximated the compensation to the landlord to extend the lease to be between £14,300 and £16,400 plus professional charges.