Crofton leases on domestic properties are gradually losing value. if your lease has about ninety years remaining, you should start considering the need for a lease extension. If lease term falls under eighty years, you will then have to pay 50% of the property's 'marriage value' on top of the standard cost of the lease extension to your landlord. Marriage value is the amount of additional value that a lease extension will add to the property. Leasehold owners in Crofton will mostly be legally entitled to a lease extension; however It would be wise to check with a lawyer to check your eligibility. In some circumstances you may not be entitled. There are also strict deadlines and steps to comply with once the process has commenced so it’s prudent to be guided by a lawyer during the process.
Leasehold properties in Crofton with in excess of 100 years remaining on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
Retaining our service gives you increased control over the value of your Crofton leasehold, as your property will be more valuable and marketable in terms of lease length should you want to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Last year Austin, started to get close to the eighty-year mark with the lease on his one bedroom apartment in Crofton. Having purchased his home two decades ago, the lease term was of no interest. Luckily, he became aware that he would imminently be paying way over the odds for a lease extension. Austin arranged for a lease extension at the eleventh hour in September. Austin and the freeholder via the management company subsequently agreed on the final figure of £6,000 . If the lease had dropped lower than 80 years, the figure would have escalated by at least £1,075.
In 2014 we were contacted by Mrs Mollie Wilson who, having bought a recently refurbished apartment in Crofton in June 1997. We are asked if we could estimate the price could be to prolong the lease by an additional years. Comparable residencies in Crofton with 100 year plus lease were worth £285,000. The average ground rent payable was £55 billed annually. The lease termination date was on 10 May 2106. Having 80 years unexpired we approximated the premium to the landlord to extend the lease to be between £12,400 and £14,200 not including legals.
In 2014 we were contacted by Ms Laura Patel who, having completed a basement flat in Crofton in March 2011. We are asked if we could approximate the compensation to the landlord would likely be to prolong the lease by an additional years. Similar premises in Crofton with a long lease were worth £200,800. The mid-range amount of ground rent was £65 invoiced yearly. The lease elapsed in 2086. Considering the 60 years unexpired we calculated the compensation to the freeholder for the lease extension to be between £20,900 and £24,200 plus costs.