Owning a flat usually means owning a lease of the property, which has a set term of years. This lease will usually be granted for a prescribed period of time , usually 99 or 125 years, although we have seen longer and shorter terms in Cotswolds. Inevitably, the term of lease left shortens as time goes by. This is often overlooked and only raises itself as an issue when the property has to be sold or refinanced. The fewer the years remaining the less it is worth and the more it will cost to procure a lease extension. Eligible leaseholders in Cotswolds have the legal entitlement to extend the lease for a further 90 years under the 1993 Leasehold Reform Act. Please give careful attention before delaying your Cotswolds lease extension. Holding off the cost now only increases the price you will ultimately have to pay for a lease extension
Leasehold residencies in Cotswolds with over 100 years left 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 property. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and service 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. |
| 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 |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Using our service gives you better control over the value of your Cotswolds leasehold, as your property will be more valuable and saleable in relation to the lease length should you decide to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
During the course of the last few months Aaron, started to get close to the 80-year mark with the lease on his basement apartment in Cotswolds. In buying his flat two decades ago, the lease term was of no bearing. As luck would have it, he realised he would soon be paying way over the odds for a lease extension. Aaron arranged for a lease extension just in the nick of time in September. Aaron and the landlord subsequently settled on the final figure of £5,000 . If he not met the deadline, the price would have gone up by at least £1,125.
Dr D Michel took over the lease of a purpose-built apartment in Cotswolds in September 2000. We are asked if we could estimate the premium would be to prolong the lease by ninety years. Comparable flats in Cotswolds with a long lease were in the region of £176,200. The average amount of ground rent was £65 invoiced every twelve months. The lease lapsed on 1 August 2081. Considering the 56 years left we approximated the compensation to the landlord to extend the lease to be within £29,500 and £34,000 not including professional charges.
In 2013 we were approached by Mr Ben Nelson who, having purchased a newly refurbished flat in Cotswolds in November 1996. We are asked if we could estimate the compensation to the landlord could be to extend the lease by 90 years. Comparative premises in Cotswolds with an extended lease were worth £242,600. The average ground rent payable was £45 billed every twelve months. The lease terminated in 2092. Given that there were 67 years unexpired we estimated the compensation to the landlord for the lease extension to be between £11,400 and £13,200 not including costs.