The re-sale value of a leasehold property in Crabtree depends on how many years the lease has left to run. If it is close to or less than 80 years you should expect difficulties on re-sale, so it is recommended to arrange for the lease to be extended before buying. Ideally one should start the process of extending the lease is when a lease still has 82 years remaining so that a lease extension can be concluded in advance of the eighty year cut off point. Leasehold Reform legislation enables Crabtree qualifying lessees to a 90 year extension added to their residual lease term (ie if your lease has 50 years left the statutory lease extension will provide a new term of 140 years). The reason of the valuation is to determine the sum payable by the lessee to the freeholder for the purchase of the lease extension.
It is conventional wisdom that a residential leasehold with over 100 years remaining is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be equivalent in value to a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The lawyers 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 conveyancing solicitor we work with provide it.
In the wake of 6 months of unsuccessful negotiations with the landlord of her leasehold apartment in Crabtree, Jade started the lease extension process just as her lease was coming close to the all-important 80-year deadline. The lease extension completed in May 2009. The landlord’s charges were kept to an absolute minimum.
Last year we were contacted by Mr O Gunderson , who was assigned a lease of a studio apartment in Crabtree in March 1996. The question was if we could approximate the compensation to the landlord would be to prolong the lease by ninety years. Comparative properties in Crabtree with 100 year plus lease were in the region of £225,800. The mid-range ground rent payable was £60 collected annually. The lease lapsed on 25 June 2086. Having 60 years remaining we estimated the compensation to the landlord for the lease extension to be between £23,800 and £27,400 exclusive of legals.
In 2012 we were phoned by Mr and Mrs. W Brooks who, having moved into a ground floor apartment in Crabtree in July 2004. We are asked if we could shed any light on how much (approximately) compensation to the landlord would likely be for a ninety year lease extension. Identical flats in Crabtree with a long lease were valued around £210,000. The average ground rent payable was £50 collected yearly. The lease elapsed on 16 January 2106. Taking into account 80 years left we approximated the compensation to the freeholder for the lease extension to be within £8,600 and £9,800 exclusive of expenses.