Unfortunately that a Chorlton 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 first few years due to the depreciation being disguised by increases in the Chorlton property prices.Once your lease nears 85ish years, you should 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 slips lower than 80 years - otherwise a higher premium will be due. The majority of flat owners in Chorlton will be able to extend under the legislation; however a conveyancer will be able to clarify if you qualify for an extension. In some cases you may not qualify. There are also strict deadlines and procedures to be adhered to once the process is instigated and you will need to be guided by your conveyancer throughout the formalities.
It is conventional wisdom that a residential leasehold with more than 100 years remaining is worth approximately the same as a freehold. Where an further ninety years added to all but the shortest lease, the premises will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Barclays plc | Mortgage term plus 25 years provided that leases of less than 85 years are be referred to us for approval. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaing from the start of the mortgage. |
| Nationwide Building Society | - Our minimum unexpired lease term is 55 years. - There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start). 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 Issuing Office (Will be declined): - Unexpired lease term less than 55 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 is less than or equal to 5 years Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability): - Unexpired lease term is 55 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 Issuing Office): - 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 Issuing Office (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 (does not apply to Shared Ownership) - Starting Ground Rent greater than 0.1% of the property value - Ground Rent review period less than or equal to every 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 Issuing Office (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 Issuing Office): - 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. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
Using our service will provide you enhanced control over the value of your Chorlton leasehold, as your property will be more valuable and marketable in terms of lease length should you decide to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
After protracted negotiations with the landlord of her basement flat in Chorlton, Imogen started the lease extension process as the 80 year deadline was swiftly advancing. The transaction was finalised in March 2011. The freeholder’s costs were kept to an absolute minimum.
In 2009 we were phoned by Mr and Mrs. H Green who, having owned a purpose-built apartment in Chorlton in October 2009. The question was if we could approximate the price could be to prolong the lease by a further 90 years. Comparable flats in Chorlton with 100 year plus lease were in the region of £210,600. The mid-range amount of ground rent was £45 billed yearly. The lease concluded in 2083. Taking into account 62 years outstanding we calculated the compensation to the freeholder for the lease extension to be between £18,100 and £20,800 not including expenses.
Mrs Harriet Scott moved into a one bedroom apartment in Chorlton in June 2006. We are asked if we could approximate the compensation to the landlord would likely be to extend the lease by an additional years. Similar premises in Chorlton with an extended lease were worth £265,000. The average ground rent payable was £50 billed yearly. The lease lapsed in 2094. Taking into account 73 years outstanding we estimated the compensation to the landlord to extend the lease to be between £9,500 and £11,000 exclusive of fees.