If you are facing a significant premium because your lease in Cotswolds has dropped toward the 80-year mark, your previous lawyer may be at fault. Our panel of experts specialise in recovering lease extension costs from negligent firms who failed to protect your investment.
Main reasons to commence your Cotswolds lease extension today:
A Cotswolds leasehold property depreciates with the years remaining on the lease.
With a residential leasehold property in Cotswolds, you effectively rent it for a certain period of time. Modern flat leases are usually granted for 99 years or 125. Even though this may appear like a lengthy period of time, you should think about extending the lease sooner as opposed to later. The general rule is that the shorter the number of years is the cost of extending the lease becomes disproportionately greater especially when there are less than eighty years left. Anyone in Cotswolds with a lease approaching 81 years left should seriously think of extending it sooner rather than later. When a lease has below 80 years remaining, under the relevant legislation the freeholder can calculate and charge a greater premium, based on a technical calculation, known as “marriage value” which is payable.
An extended lease has roughly the same value as a freehold
It is conventional wisdom that a residential leasehold with in excess of one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to any lease with more than 30 years remaining, the property will be worth the same as a freehold for many years ahead.
Lenders may not lend on a short lease
Banks and building societies are tightening their criteria and many now require flats to have a minimum of sixty if not seventy years left at the expiry of the mortgage. Given that plenty of flats in Cotswolds were built in the 1950s, 1960s and 1970s this means many now need to be extended if they wish to get a mortgage.
| Lender |
Requirement
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| Barnsley Building Society |
60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term.
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| 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.
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| 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
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| TSB |
Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.
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| The Mortgage Works |
Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:
Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer
New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer
Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.
SECOND HAND PROPERTIES
Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI
NEW BUILD PROPERTIES (includes office conversions)
Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges
For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance
* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years
Lease Extensions We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where a proposed Lease Extension does not meet these requirements, however you feel that this is in the best interest for our mutual client, please refer all details to the Issuing Office for us to consider.
Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning.
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Why use us for your lease extension in Cotswolds?
Retaining our service will provide you better control over the value of your Cotswolds leasehold, as your property will be more valuable and marketable in terms of lease length should you wish to sell.
The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Cotswolds Lease Extension Example Cases:
Jack, Cotswolds, Gloucestershire
Last Summer Jack, started to get close to the eighty-year mark with the lease on his studio apartment in Cotswolds. Having bought his flat two decades ago, the unexpired term was of no significance. As luck would have it, he recognised he would soon be paying an inflated amount for a lease extension. Jack extended the lease just under the wire in March. Jack and the landlord who owned the flat above eventually agreed on the final figure of £5,000 . If the lease had gone lower than 80 years, the premium would have escalated by a minimum £1,100.
Cotswolds case:
Mr and Mrs. I Simon owned a ground floor apartment in Cotswolds in January 2012. The question was if we could approximate the compensation to the landlord could be for a ninety year lease extension. Similar premises in Cotswolds with 100 year plus lease were worth £256,600. The average amount of ground rent was £60 billed annually. The lease ended in 2078. Considering the 52 years left we estimated the premium to the landlord to extend the lease to be within £39,000 and £45,000 plus legals.
Cotswolds case:
Mr Leo Morgan owned a purpose-built apartment in Cotswolds in April 2006. We are asked if we could shed any light on how much (approximately) price would likely be for a 90 year extension to my lease. Comparable residencies in Cotswolds with a long lease were worth £218,000. The mid-range amount of ground rent was £45 collected per annum. The lease concluded on 12 August 2089. Given that there were 63 years remaining we approximated the premium to the landlord to extend the lease to be within £17,100 and £19,800 plus costs.