Owning a flat usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. This lease will ordinarily be granted for a prescribed period of time , ordinarily 99 or 125 years, although we have come across longer and shorter terms in Desford. Inevitably, the term of lease left shortens over time. This is often overlooked and only raises itself as an issue when the residence has to be sold or refinanced. The fewer the years remaining the lower the value of the property and the more it will cost to extend the lease. Eligible long lease owners in Desford have the legal entitlement to extend the lease for a further ninety years under Leasehold Reform legislation. You should give due attention before putting off your Desford lease extension. Holding off that expense now simply increases the price you will eventually have to pay for a lease extension
Leasehold properties in Desford with over one hundred years left on the lease are often referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such circumstances there is often little upside in purchasing the freehold unless savings on ground rent and maintenance charges justify 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Using our service gives you better control over the value of your Desford leasehold, as your property will be more valuable and marketable in terms of lease length should you want to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
During the course of the last few months Benjamin, came perilously near to the eighty-year threshold with the lease on his purpose- built flat in Desford. Having purchased his property twenty years ago, the unexpired term was of minimal importance. As luck would have it, he noticed he needed to take steps soon on a lease extension. Benjamin extended the lease just in the nick of time in June. Benjamin and the landlord who owned the flat above subsequently settled on a premium of £5,000 . If he had missed the deadline, the price would have increased by at least £1,000.
Last October we were phoned by Dr Alfie Reed , who acquired a one bedroom apartment in Desford in January 2009. We are asked if we could estimate the price would likely be for a ninety year lease extension. Comparative premises in Desford with 100 year plus lease were worth £176,200. The average ground rent payable was £65 invoiced yearly. The lease lapsed on 18 May 2082. Given that there were 56 years remaining we calculated the premium to the freeholder to extend the lease to be between £29,500 and £34,000 not including expenses.
In 2010 we were called by Dr Ben Allen who, having acquired a purpose-built apartment in Desford in May 2007. We are asked if we could shed any light on how much (roughly) premium would be for a ninety year lease extension. Identical properties in Desford with a long lease were valued around £242,600. The average amount of ground rent was £45 invoiced annually. The lease elapsed in 2093. Taking into account 67 years remaining we approximated the premium to the landlord for the lease extension to be between £11,400 and £13,200 not including professional charges.