Darley Abbey Lease Extension - Free Consultation

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Main reasons to commence your Darley Abbey lease extension


Top reasons for lease extension now:

Increase your lease and increase your Darley Abbey property value

With a residential leasehold property in Darley Abbey, you are actually buying a right to reside in a property for a prescribed time frame. Modern flat leases are usually granted for 99 years or 125. Many leasehold owners become complacent as this seems like a lengthy period of time, you may think about extending the lease sooner as opposed to later. The general rule is that the shorter the lease is the cost of extending the lease becomes disproportionately more expensive especially when there are less than 80 years remaining. Anyone in Darley Abbey with a lease nearing 81 years unexpired should seriously think of extending it without delay. When the lease term has less than 80 years remaining, under the relevant statute the freeholder can calculate and demand a larger premium, assessed on a technical multiplication, strangely termed as “marriage value” which is payable.

An extended lease has roughly the same value as a freehold

It is generally considered that a property with in excess of one hundred years remaining is worth roughly the same as a freehold. Where an further 90 years added to any lease with more than 30 years left, the residence will be equivalent in value to a freehold for many years in the future.

Banks and Building Societies will not finance a property on a short lease

Mortgage lenders have specific criteria when lending funds secured on leasehold property. Some will simply refrain from lending at all once an unexpired lease term goes below a certain unexpired lease term. Many Lending institutions will not consider property with an unexpired below 75 years as adequate security. As well as this being important when selling, it is also relevant if you are intending to remortgage your Darley Abbey home.

Lender Requirement
Bank of Scotland Minimum 70 years from the date of the mortgage.
Barnsley Building Society 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term.
Coventry Building Society 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.
Nationwide Building Society - Our minimum unexpired lease term is 55 years, except where lending is over 85% of the purchase price/valuation on a second hand flat, in which case our minimum unexpired term is 90 years.
- There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start).

Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer
- Where lending is over 85% of the purchase price/valuation on a second hand flat and the unexpired lease term on the offer is 90 years or more - only advise us if the actual lease term is less than 90 years.

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 55 years
- Unexpired lease term less than 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period is less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 55 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial, etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years (Minimum 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat)
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (Will be declined)
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house (does not apply to Shared Ownership)
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn Ground Rent (Annual Rent) charges

For the avoidance of doubt, any New Build properties completed but not sold pre-30 June 2022 will only be acceptable if the Lease conforms to the above guidance.

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years.

Lease Extensions

We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to Issuing Office.
Royal Bank of Scotland Mortgage term plus 30 years.

Get in touch with one of our Darley Abbey lease extension solicitors or enfranchisement solicitors

Irrespective of whether you are a tenant or a landlord in Darley Abbey,the lease extension experts that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Darley Abbey valuers.

Darley Abbey Lease Extension Case Studies:

John, Darley Abbey, Derbyshire,

John was the the leasehold proprietor of a 2 bedroom flat in Darley Abbey being sold with a lease of a few days over fifty eight years left. John informally approached his freeholder a well known Manchester-based freehold company for a lease extension. The freeholder was prepared to give an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £50 yearly. No ground rent would be payable on a lease extension were John to exercise his statutory right. John obtained expert advice and was able to make an informed decision and handle with the matter and sell the flat.

Darley Abbey case:

Mr and Mrs. J Martin purchased a recently refurbished apartment in Darley Abbey in May 2005. The question was if we could estimate the price would likely be to prolong the lease by an additional years. Identical residencies in Darley Abbey with an extended lease were worth £174,200. The average ground rent payable was £55 invoiced monthly. The lease expired on 8 August 2075. Considering the 51 years outstanding we approximated the premium to the freeholder to extend the lease to be within £31,400 and £36,200 exclusive of professional charges.

Darley Abbey case:

Last Spring we were called by Mr and Mrs. R Carter , who acquired a garden apartment in Darley Abbey in April 2006. The dilemma was if we could approximate the compensation to the landlord would likely be to extend the lease by a further 90 years. Comparable properties in Darley Abbey with an extended lease were worth £285,000. The mid-range amount of ground rent was £45 invoiced every twelve months. The lease came to a finish in 2095. Having 71 years unexpired we estimated the compensation to the freeholder for the lease extension to be within £12,400 and £14,200 not including professional charges.