It’s a harsh truth that a Clare residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the first few years due to the loss of value being disguised by increases in the Clare property market.Where your lease has approximately ninety years left, you should start thinking about a lease extension. If lease term dips under eighty years, you will end up paying half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property Most leasehold owners in Clare will be able to extend under the legislation; however a lawyer should be able to clarify whether you are eligibility. In some cases you may not be entitled. There are also strict timetables and procedures to be adhered to once the process is initiated and you will need to be guided by your conveyancing solicitor for the duration of the formalities.
Leasehold properties in Clare with in excess of 100 years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and maintenance charges merit it.
| 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. |
| 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; |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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. |
Engaging our service gives you increased control over the value of your Clare leasehold, as your property will be more valuable and marketable in respect of lease length should you decide to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Daniel owned a 2 bedroom flat in Clare on the market with a lease of fraction over 72 years left. Daniel on an informal basis contacted his freeholder a well known Bristol-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years on the basis of an increased rent to £50 annually. No ground rent would be due on a lease extension were Daniel to exercise his statutory right. Daniel procured expert legal guidance and secured an acceptable resolution without resorting to tribunal and readily saleable.
In 2009 we were called by Mr and Mrs. J Taylor who, having acquired a basement apartment in Clare in August 2006. We are asked if we could approximate the compensation to the landlord would likely be to extend the lease by a further 90 years. Comparable premises in Clare with an extended lease were in the region of £290,000. The mid-range ground rent payable was £45 billed monthly. The lease came to a finish in 2097. Given that there were 72 years outstanding we approximated the compensation to the landlord to extend the lease to be between £11,400 and £13,200 not including fees.
In 2014 we were contacted by Dr D Petit who, having took over the lease of a basement flat in Clare in October 2009. We are asked if we could approximate the premium would be for a ninety year lease extension. Comparable flats in Clare with a long lease were worth £235,600. The mid-range amount of ground rent was £60 collected annually. The lease lapsed in 2087. Given that there were 62 years as a residual term we estimated the compensation to the freeholder for the lease extension to be between £21,900 and £25,200 exclusive of professional charges.