Owning a flat usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. This lease will usually be granted for a set period of time , ordinarily 99 or 125 years, although we have witnessed longer and shorter terms in Cirencester. Inevitably, the period of lease left shortens as time goes by. This is often ignored and only becomes a problem when the flat or house needs to be sold or refinanced. The fewer the years remaining the lower the value of the property and the more expensive it will be to obtain a lease extension. Qualifying leaseholders in Cirencester have the right to extend the lease for a further ninety years in accordance with statute. Do give due deliberation before delaying your Cirencester lease extension. Putting off that expense now simply increases the price you will ultimately have to pay to extend your lease
It is conventional wisdom that a residential leasehold with over 100 years remaining is worth approximately 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 many years in the future.
| 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. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
Retaining our service gives you better control over the value of your Cirencester leasehold, as your property will be more valuable and marketable in terms of lease length should you wish to sell. The conveyancers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Last Spring Lewis, came seriously near to the eighty-year mark with the lease on his two bedroom apartment in Cirencester. In buying his property 18 years previously, the lease term was of no importance. As luck would have it, he realised he would imminently be paying way over the odds for a lease extension. Lewis was able to extend his lease at the eleventh hour last January. Lewis and the landlord ultimately agreed on sum of £6,000 . If he not met the deadline, the price would have gone up by at least £1,075.
Last October we were phoned by Mr and Mrs. B Murphy , who acquired a purpose-built flat in Cirencester in October 2006. The question was if we could shed any light on how much (approximately) compensation to the landlord would likely be for a 90 year lease extension. Comparable premises in Cirencester with 100 year plus lease were in the region of £200,800. The average amount of ground rent was £65 collected per annum. The lease terminated in 2085. Taking into account 60 years remaining we approximated the premium to the freeholder to extend the lease to be between £20,900 and £24,200 not including expenses.
Dr Natalie Laurent was assigned a lease of a one bedroom apartment in Cirencester in July 2003. We are asked if we could shed any light on how much (approximately) premium would be for a 90 year extension to my lease. Comparable flats in Cirencester with a long lease were in the region of £255,000. The average ground rent payable was £50 invoiced monthly. The lease ended on 27 November 2096. Considering the 71 years outstanding we estimated the compensation to the freeholder for the lease extension to be between £9,500 and £11,000 not including fees.