Danbury leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease becomes more expensive. It is the case that most Danbury tenants have the right to extend their lease by an additional ninety years under the 1993 Leasehold Reform Act. Where you are a leasehold owner in Danbury you should check if your lease has between seventy and 90 years left. In particular once the remaining lease term slips under eighty years, the compensation to the landlord for any lease extension increases dramatically as part of the premium you pay is what is known as a marriage value
It is conventional wisdom that a property with over one hundred years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 30 years remaining, the residence will be worth the same as a freehold for many years ahead.
| 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. |
| 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. |
| 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 conveyancers that we work with handle Danbury 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.
After unsuccessful negotiations with the freeholder of her two bedroom apartment in Danbury, Sarah initiated the lease extension process just as her lease was coming close to the crucial 80-year threshold. The lease extension was finalised in October 2014. The freeholder’s costs were kept to an absolute minimum.
In 2010 we were e-mailed by Mr B Edwards who, having owned a first floor flat in Danbury in October 2007. We are asked if we could approximate the premium would be to extend the lease by ninety years. Similar residencies in Danbury with 100 year plus lease were in the region of £227,800. The average amount of ground rent was £45 invoiced every twelve months. The lease ran out in 2090. Having 65 years outstanding we approximated the compensation to the landlord to extend the lease to be within £13,300 and £15,400 plus professional charges.
Mr and Mrs. Y Parker bought a garden flat in Danbury in September 2005. We are asked if we could approximate the premium could be to prolong the lease by 90 years. Similar homes in Danbury with a long lease were worth £275,000. The mid-range amount of ground rent was £55 collected quarterly. The lease concluded in 2101. Given that there were 76 years left we calculated the compensation to the landlord to extend the lease to be between £9,500 and £11,000 not including legals.