Unfortunately that a Downend residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the first few years due to the deflation being disguised by increases in the Downend property market.Once your lease gets to 85ish years, you should start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease falls lower than 80 years - otherwise a higher amount will be due. The majority of leasehold owners in Downend will be able to extend under the legislation; however a conveyancing solicitor should be able to clarify whether you qualify for an extension. In some situations you may not be entitled. There are also strict deadlines and procedures to follow once the process has commenced and you will need to be guided by your conveyancer for the duration of the formalities.
Leasehold residencies in Downend with over 100 years outstanding 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 home. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and estate charges justify it.
| Lender | Requirement |
|---|---|
| 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 should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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. |
| Godiva Mortgages | 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers 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.
Harrison was the the leasehold owner of a 2 bedroom flat in Downend being sold with a lease of just over 72 years outstanding. Harrison informally approached his landlord being a well known local-based freehold company and enquired on a premium to extend the lease. The freeholder was prepared to give an extension on non-statutory terms taking the lease to 125 years subject to a new rent to start with set at £200 per annum and doubled every 25 years thereafter. No ground rent would be due on a lease extension were Harrison to exercise his statutory right. Harrison obtained expert legal guidance and secured an acceptable resolution without going to tribunal and sell the flat.
In 2009 we were approached by Mr and Mrs. J Sánchez who, having bought a garden apartment in Downend in July 1995. The question was if we could estimate the premium could be for a 90 year lease extension. Similar premises in Downend with an extended lease were valued around £290,000. The average amount of ground rent was £45 billed per annum. The lease expired on 20 November 2097. Given that there were 72 years outstanding we approximated the compensation to the freeholder to extend the lease to be between £11,400 and £13,200 exclusive of costs.
Mr and Mrs. E Richardson bought a first floor flat in Downend in May 1996. The dilemma was if we could estimate the compensation to the landlord would likely be for a 90 year extension to my lease. Identical properties in Downend with a long lease were valued about £233,200. The average amount of ground rent was £60 billed quarterly. The lease terminated on 16 September 2086. Given that there were 61 years outstanding we estimated the compensation to the freeholder to extend the lease to be within £22,800 and £26,400 not including costs.