Cotswolds leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease gets more expensive. It is the case that most Cotswolds tenants have the right to extend their lease by an additional ninety years by virtue of the 1993 Leasehold Reform Act. If you are a leasehold owner in Cotswolds you must investigate if your lease has between 70 and 90 years left. There are compelling reasons why a Cotswolds flat owner with a lease having around 80 years left should take steps to make sure that a lease extension is actioned without delay
Leasehold premises in Cotswolds with over 100 years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such circumstances there is often little upside in buying the freehold unless savings on ground rent and estate charges merit it.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Using our service gives you better control over the value of your Cotswolds leasehold, as your property will be more valuable and marketable in respect of lease length should you want 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.
Nathan owned a studio apartment in Cotswolds on the market with a lease of a little over 59 years unexpired. Nathan on an informal basis spoke with his freeholder being a well known Manchester-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to grant an extension taking the lease to 125 years on the basis of a rise in the rent to £125 annually. No ground rent would be payable on a lease extension were Nathan to invoke his statutory right. Nathan procured expert advice and was able to make a more informed judgement and handle with the matter and ending up with a market value flat.
Mr and Mrs. U Allen owned a garden apartment in Cotswolds in May 1998. The question was if we could estimate the premium could be for a ninety year extension to my lease. Identical flats in Cotswolds with a long lease were in the region of £255,000. The mid-range amount of ground rent was £50 billed annually. The lease terminated on 8 July 2096. Taking into account 71 years outstanding we estimated the compensation to the landlord for the lease extension to be between £9,500 and £11,000 not including legals.
Dr W Robinson owned a first floor flat in Cotswolds in November 2011. We are asked if we could estimate the compensation to the landlord would likely be for a ninety year lease extension. Comparable properties in Cotswolds with 100 year plus lease were valued around £254,200. The mid-range ground rent payable was £60 invoiced quarterly. The lease elapsed in 2076. Considering the 51 years left we approximated the compensation to the freeholder for the lease extension to be within £43,700 and £50,600 plus professional charges.