For anyone whose Cross Keys home is held on a long lease, the message is clear – if no remedial action is taken, the property will eventually revert to the freeholder, leaving you empty-handed. The shorter the lease the lower the value of the property and the more expensive it will be to obtain a lease extension.
Leasehold properties in Cross Keys with more than 100 years outstanding on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little to be gained by buying the freehold unless savings on ground rent and maintenance charges warrant it.
| 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. |
| Birmingham Midshires | Minimum 70 years from the date 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancing solicitors that we work with handle Cross Keys 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.
Seth was the the leasehold proprietor of a 2 bedroom apartment in Cross Keys on the market with a lease of fraction over 59 years unexpired. Seth informally spoke with his freeholder a well known Manchester-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to grant an extension taking the lease to 125 years on the basis of a new rent at the outset set at £200 per annum and doubled every 25 years thereafter. Ordinarily, ground rent would not be due on a lease extension were Seth to invoke his statutory right. Seth procured expert advice and secured satisfactory deal informally and readily saleable.
In 2013 we were approached by Mr and Mrs. Y Scott who, having was assigned a lease of a newly refurbished flat in Cross Keys in November 1995. The dilemma was if we could approximate the premium could be to extend the lease by 90 years. Similar residencies in Cross Keys with 100 year plus lease were valued around £193,400. The average amount of ground rent was £65 collected quarterly. The lease termination date was in 2084. Given that there were 59 years left we calculated the premium to the freeholder to extend the lease to be between £21,900 and £25,200 not including legals.
Ms U Reed owned a garden apartment in Cross Keys in February 2002. We are asked if we could estimate the premium could be to prolong the lease by 90 years. Identical flats in Cross Keys with a long lease were in the region of £255,000. The mid-range ground rent payable was £50 invoiced yearly. The lease concluded in 2095. Given that there were 70 years as a residual term we calculated the premium to the freeholder to extend the lease to be within £10,500 and £12,000 exclusive of fees.