Cullercoats 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 the lease becomes more expensive. It is the case that most Cullercoats tenants have the right to extend their lease by an additional 90 years under the 1993 Leasehold Reform Act. Where you are a leasehold owner in Cullercoats you would be well advised to see if your lease has between seventy and ninety years left. There are compelling reasons why a Cullercoats leaseholder with a lease having around eighty years remaining should take steps to ensure that a lease extension is effected without delay
Leasehold residencies in Cullercoats with more than 100 years outstanding on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little upside in purchasing the reversionary interest unless savings on ground rent and service charges merit 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. |
| 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; |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancers that we work with handle Cullercoats 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 conveyancer we work with provide it.
Off the back of unsuccessful discussions with the landlord of her garden apartment in Cullercoats, Emma started the lease extension process just as her lease was nearing the all-important 80-year mark. The lease extension completed in November 2007. The freeholder’s fees were restricted to approximately 550 pounds.
Mr and Mrs. N Patel bought a newly refurbished apartment in Cullercoats in February 1999. We are asked if we could approximate the premium would likely be to prolong the lease by ninety years. Identical homes in Cullercoats with a long lease were worth £280,000. The mid-range ground rent payable was £45 invoiced yearly. The lease ran out in 2096. Having 70 years as a residual term we calculated the premium to the freeholder to extend the lease to be between £12,400 and £14,200 not including professional charges.
Dr E Baker bought a recently refurbished flat in Cullercoats in August 1996. We are asked if we could estimate the compensation to the landlord could be for a ninety year lease extension. Identical flats in Cullercoats with a long lease were valued about £223,400. The mid-range ground rent payable was £60 invoiced yearly. The lease ended in 2085. Taking into account 59 years as a residual term we approximated the compensation to the landlord to extend the lease to be between £27,600 and £31,800 plus expenses.