Owning a apartment usually means owning a lease of the property, which has a finite term of years. This lease will normally be granted for a prescribed period of time , usually 99 or 125 years, although we have come across longer and shorter terms in Downend. Inevitably, the length of lease remaining shortens over time. This is often overlooked and only becomes a problem when the residence has to be disposed of or re-mortgaged. The fewer the years remaining the lower the value of the property and the more expensive it will be to obtain a lease extension. Eligible leaseholders in Downend have the legal entitlement to extend the lease for a further ninety years in accordance with statute. Do give due deliberation before putting off your Downend lease extension. Holding off that expense now simply increases the price you will ultimately have to pay to extend your lease
It is generally considered that a property with in excess of 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to any lease with more than 45 years unexpired, the property will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Chelsea 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. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancing solicitors that we work with handle Downend 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.
Half a year ago Joshua, came perilously near to the eighty-year threshold with the lease on his studio flat in Downend. Having bought his property 18 years ago, the length of the lease was of little importance. Luckily, he became aware that he would soon be paying an escalated premium for Extending the lease. Joshua was able to extend his lease just in the nick of time in August. Joshua and the landlord who owned the flat above ultimately agreed on sum of £6,000 . If the lease had slipped lower than eighty years, the premium would have become more costly by a minimum £950.
Last Christmas we were phoned by Mr James Thompson , who moved into a purpose-built flat in Downend in January 2010. The dilemma was if we could shed any light on how much (approximately) price would be for a ninety year lease extension. Identical homes in Downend with a long lease were in the region of £200,000. The average amount of ground rent was £50 invoiced annually. The lease came to a finish on 14 July 2103. Taking into account 77 years left we estimated the premium to the freeholder to extend the lease to be within £8,600 and £9,800 not including costs.
Mr O Leroy bought a first floor flat in Downend in June 2008. The question was if we could shed any light on how much (approximately) price would be for a 90 year lease extension. Comparable flats in Downend with an extended lease were in the region of £265,200. The mid-range ground rent payable was £65 invoiced yearly. The lease terminated in 2092. Taking into account 66 years as a residual term we approximated the compensation to the freeholder to extend the lease to be within £15,200 and £17,600 exclusive of professional charges.