Cross Hands residential property held on a long lease is a depreciating asset because a leaseholder only owns the property for a period of years.
It is conventional wisdom that a property with over 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the residence will be worth the same as a freehold for many years in the future.
| 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. |
| 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. |
| 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. |
| 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 conveyancing solicitors that we work with handle Cross Hands 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.
Subsequent to lengthy negotiations with the landlord of her two bedroom flat in Cross Hands, Alice initiated the lease extension process as the eighty year deadline was quickly approaching. The lease extension was finalised in March 2008. The landlord’s charges were kept to an absolute minimum.
Mr and Mrs. B Parker acquired a basement flat in Cross Hands in May 2008. We are asked if we could estimate the premium could be for a ninety year lease extension. Identical flats in Cross Hands with a long lease were valued around £173,800. The average amount of ground rent was £60 billed annually. The lease end date was in 2080. Given that there were 55 years left we estimated the premium to the landlord for the lease extension to be within £31,400 and £36,200 not including professional charges.
Last month we were called by Dr Archie Nelson , who was assigned a lease of a ground floor flat in Cross Hands in June 2005. The question was if we could estimate the compensation to the landlord would be to prolong the lease by 90 years. Similar flats in Cross Hands with a long lease were in the region of £235,200. The average ground rent payable was £45 invoiced monthly. The lease ended on 23 October 2091. Having 66 years unexpired we estimated the compensation to the freeholder for the lease extension to be within £12,400 and £14,200 exclusive of costs.