Cirencester leases on residential deteriorating in value. Where your lease has in the region of 90 years remaining, you should start considering the need for a lease extension. Eighty years is a significant number: when the remaining term of a lease falls below this level then you start paying an additional element called marriage value. Flat owners in Cirencester will mostly qualify for a lease extension; however a solicitor will confirm your eligibility. In some cases you may not qualify. There are prescribed deadlines and formalities to follow once the process has commenced so it’s prudent to be guided by a lawyer during the process.
It is conventional wisdom that a property with over 100 years unexpired lease term is worth roughly the same as a freehold. Where an further 90 years added to all but the shortest lease, the residence will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). 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; |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| 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. |
| 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 |
The conveyancers that we work with undertake Cirencester 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 lawyer we work with provide it.
After lengthy correspondence with the freeholder of her first floor apartment in Cirencester, Abbie initiated the lease extension process just as the lease was coming close to the all-important eighty-year deadline. The legal work was concluded in April 2011. The freeholder’s charges were kept to an absolute minimum.
In 2014 we were approached by Mr and Mrs. L Alexander who, having was assigned a lease of a one bedroom apartment in Cirencester in October 2002. The question was if we could approximate the premium would be for a 90 year lease extension. Similar homes in Cirencester with 100 year plus lease were in the region of £256,600. The mid-range amount of ground rent was £60 collected annually. The lease lapsed in 2078. Given that there were 52 years remaining we estimated the compensation to the freeholder to extend the lease to be between £39,000 and £45,000 exclusive of costs.
In 2012 we were e-mailed by Mr and Mrs. G Torres who, having completed a purpose-built flat in Cirencester in February 2010. The question was if we could shed any light on how much (roughly) price would be for a 90 year lease extension. Comparable premises in Cirencester with an extended lease were worth £218,000. The average ground rent payable was £45 collected quarterly. The lease end date was in 2089. Given that there were 63 years outstanding we estimated the compensation to the freeholder for the lease extension to be between £17,100 and £19,800 exclusive of expenses.