Cranbrook leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease gets more expensive. Most owners of residential leasehold property in Cranbrook enjoy rights under legislation to extend the terms of their leases. Where you are a leasehold owner in Cranbrook you really ought to check if your lease has between 70 and ninety years remaining. In particular once the remaining lease term slips under 80 years, the amount payable for any lease extension increases dramatically as an element of the premium you will incur is what is known as a marriage value
Leasehold premises in Cranbrook with over 100 years unexpired on the lease are sometimes 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 upside in buying the reversionary interest unless savings on ground rent and estate charges justify it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
The conveyancing solicitors that we work with undertake Cranbrook 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 lawyer we work with provide it.
Subsequent to protracted correspondence with the landlord of her garden flat in Cranbrook, Lydia commenced the lease extension process as the eighty year deadline was fast coming. The lease extension was concluded in April 2007. The landlord’s charges were restricted to less than 650 pounds.
In 2014 we were called by Dr J Baker who, having completed a first floor flat in Cranbrook in May 2010. The dilemma was if we could estimate the price would likely be for a ninety year lease extension. Comparable properties in Cranbrook with 100 year plus lease were worth £210,000. The average amount of ground rent was £50 invoiced monthly. The lease terminated on 7 November 2105. Considering the 80 years as a residual term we approximated the compensation to the freeholder to extend the lease to be between £8,600 and £9,800 plus professional charges.
In 2012 we were called by Dr Michael Morgan who, having bought a one bedroom flat in Cranbrook in November 2004. The question was if we could shed any light on how much (roughly) compensation to the landlord would be to prolong the lease by an additional years. Comparative properties in Cranbrook with a long lease were in the region of £280,000. The average amount of ground rent was £45 billed yearly. The lease expiry date was in 2094. Considering the 69 years remaining we calculated the premium to the freeholder for the lease extension to be between £12,400 and £14,200 plus costs.