For those whose Crabtree home is held on a long lease, the message is clear – if you do nothing, the property will eventually revert to the freeholder, leaving you empty-handed. The fewer the years remaining the lower the value of the property and the more it will cost to obtain a lease extension.
Leasehold residencies in Crabtree with in excess of 100 years left on the lease are often regarded as a ‘virtual freehold’. This is where the lease value 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 service charges justify it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Halifax | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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 conveyancers that we work with undertake Crabtree 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.
Luke owned a conversion apartment in Crabtree being marketed with a lease of a little over 72 years outstanding. Luke on an informal basis approached his landlord a well known Manchester-based freehold company for a lease extension. The freeholder was keen to grant an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £150 per annum and increase every 25 years thereafter. No ground rent would be due on a lease extension were Luke to invoke his statutory right. Luke obtained expert advice and was able to make an informed decision and deal with the matter and ending up with a market value flat.
Last year we were contacted by Mrs Sian Bennett , who purchased a ground floor flat in Crabtree in August 1998. The dilemma was if we could shed any light on how much (approximately) compensation to the landlord could be to prolong the lease by a further 90 years. Comparative premises in Crabtree with a long lease were valued around £205,000. The average ground rent payable was £50 billed yearly. The lease ran out on 2 March 2105. Considering the 79 years outstanding we calculated the compensation to the freeholder to extend the lease to be within £8,600 and £9,800 not including expenses.
In 2011 we were phoned by Mr Max Simon who, having purchased a basement flat in Crabtree in October 2006. We are asked if we could approximate the price would be to prolong the lease by an additional years. Comparable homes in Crabtree with 100 year plus lease were worth £275,000. The mid-range amount of ground rent was £65 collected every twelve months. The lease concluded in 2094. Given that there were 68 years left we approximated the compensation to the freeholder to extend the lease to be between £12,400 and £14,200 exclusive of legals.