Downham Market 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 the lease becomes more expensive. It is the case that most Downham Market tenants have the right to extend their lease by an additional 90 years by virtue of the 1993 Leasehold Reform Act. Where you are a leasehold owner in Downham Market you would be well advised to check if your lease has between seventy and ninety years remaining. In particular once the remaining lease term slips under eighty years, the compensation to the landlord for any lease extension sharply increases as an element of the premium you pay is what is known as a marriage value
Leasehold premises in Downham Market with in excess of 100 years outstanding on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and service charges warrant it.
| 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; |
| 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. |
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Lease extensions in Downham Market can be a difficult process. We recommend you procure guidance from a lawyer and valuer well versed in the legislation and lease extension process.
We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge dealing with Downham Market lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
Last year Nathaniel, came seriously close to the 80-year mark with the lease on his purpose- built flat in Downham Market. In buying his home two decades ago, the length of the lease was of no concern. by good luck, he became aware that he would imminently be paying way over the odds for Extending the lease. Nathaniel extended the lease just under the wire last August. Nathaniel and the landlord subsequently settled on sum of £5,000 . If he had missed the deadline, the sum would have gone up by a minimum £925.
Last Autumn we were contacted by Mr and Mrs. L Anderson , who acquired a newly refurbished flat in Downham Market in March 2005. The dilemma was if we could estimate the compensation to the landlord would be to prolong the lease by an additional years. Comparable homes in Downham Market with 100 year plus lease were worth £245,000. The mid-range amount of ground rent was £50 billed yearly. The lease came to a finish in 2094. Given that there were 68 years unexpired we approximated the compensation to the landlord for the lease extension to be within £9,500 and £11,000 not including professional charges.
In 2014 we were e-mailed by Mr D Brooks who, having completed a one bedroom apartment in Downham Market in April 2000. The dilemma was if we could shed any light on how much (approximately) premium could be for a ninety year lease extension. Comparable premises in Downham Market with an extended lease were worth £285,000. The mid-range ground rent payable was £55 billed annually. The lease ended in 2105. Taking into account 79 years left we calculated the compensation to the landlord for the lease extension to be between £13,300 and £15,400 exclusive of expenses.