Unfortunately that a Common Edge residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the depreciation being disguised by increases in the Common Edge property market.Once your lease gets to 85ish years, you need to start thinking about a lease extension. If lease term dips below 80 years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of extra value that a lease extension will add the property Most flat owners in Common Edge will be able to extend under the legislation; however a conveyancing solicitor will be able to clarify if you are eligibility. In some cases you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancing solicitor from beginning to end of the process.
Leasehold properties in Common Edge with in excess of 100 years remaining on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little upside in buying the freehold unless savings on ground rent and estate charges warrant it.
| Lender | Requirement |
|---|---|
| Chelsea 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. |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date 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. |
| 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. |
The lawyers that we work with procure Common Edge 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 conveyancer we work with provide it.
Daniel owned a conversion apartment in Common Edge on the market with a lease of just over 72 years remaining. Daniel on an informal basis approached his freeholder being a well known London-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years subject to an increased rent to £50 annually. No ground rent would be due on a lease extension were Daniel to exercise his statutory right. Daniel obtained expert advice and was able to make a more informed decision and handle with the matter and sell the property.
Mrs I James acquired a one bedroom apartment in Common Edge in February 2004. We are asked if we could estimate the compensation to the landlord could be to extend the lease by 90 years. Identical flats in Common Edge with an extended lease were valued around £191,000. The mid-range ground rent payable was £65 invoiced yearly. The lease came to a finish on 15 November 2083. Taking into account 58 years remaining we estimated the premium to the freeholder for the lease extension to be between £23,800 and £27,400 exclusive of legals.
Dr Kyle Brown owned a studio flat in Common Edge in June 1995. We are asked if we could shed any light on how much (approximately) premium would likely be for a ninety year lease extension. Identical premises in Common Edge with an extended lease were valued around £250,000. The mid-range ground rent payable was £50 billed yearly. The lease ran out in 2094. Taking into account 69 years left we approximated the premium to the freeholder for the lease extension to be between £9,500 and £11,000 plus expenses.