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Main reasons to start your Dronfield lease extension


Why you should start your Dronfield lease extension today:

A Dronfield lease depreciates with the years remaining on the lease.

Owning a apartment usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. The lease will normally be granted for a fixed period of time , ordinarily 99 or 125 years, although we have witnessed longer and shorter terms in Dronfield. Inevitably, the period of lease left shortens over time. This may pass by relatively unnoticed when the flat or house has to be sold or re-mortgaged. The fewer the years remaining the less it is worth and the more it will cost to procure a lease extension. Qualifying long lease owners in Dronfield have the right to extend the lease for an additional ninety years under legislation. Do give due consideration before putting off your Dronfield lease extension. Putting off that expense now simply increases the price you will ultimately have to pay to extend your lease

An extended lease is almost the same value as a freehold

Leasehold premises in Dronfield with more than 100 years left on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and service charges justify it.

Lenders may decide not to finance a property on a short lease

Most mortgage lenders have narrowed their lending criteria in the last ten years and borrowers are encountering difficulties in arranging finance or re-mortgage against property with shorter lease terms, particularly below 75 years as they are considered to be insufficient security.

Lender Requirement
Bank of Scotland Minimum 70 years from the date of the mortgage.
Leeds Building Society 85 years remaing from the start of the mortgage.
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



TSB Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
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

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 Originations (Will be declined):
- Unexpired lease term less than 70 years
- 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 less than or equal to 5 years

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 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 0.5% 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 Originations):
- Unexpired lease term greater than 85 years
- 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 Originations (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
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to 5 years
- 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

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- 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 0.5% 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 Originations):
- 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
- Starting Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than 5 years
- Ground Rent escalation less than or equal to RPI

* 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

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

Lease extensions in Dronfield can be a difficult process. We recommend you procure guidance from a conveyancer and surveyor 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 procuring Dronfield lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.

Dronfield Lease Extension Case Summaries:

Maisie, Dronfield, Derbyshire,

Trailing unsuccessful discussions with the landlord of her first floor flat in Dronfield, Maisie initiated the lease extension process as the eighty year deadline was swiftly nearing. The lease extension was concluded in November 2010. The landlord’s fees were kept to an absolute minimum.

Dronfield case:

Last month we were called by Mr and Mrs. C Young , who moved into a first floor flat in Dronfield in November 2006. We are asked if we could shed any light on how much (approximately) price could be for a 90 year lease extension. Comparative residencies in Dronfield with an extended lease were in the region of £243,000. The mid-range ground rent payable was £65 invoiced quarterly. The lease ended on 24 August 2084. Considering the 63 years outstanding we approximated the compensation to the freeholder to extend the lease to be within £20,000 and £23,000 plus legals.

Dronfield case:

Last July we were phoned by Mrs L Wright , who took over the lease of a purpose-built flat in Dronfield in April 2010. The dilemma was if we could estimate the price would likely be for a 90 year extension to my lease. Identical premises in Dronfield with 100 year plus lease were in the region of £181,600. The mid-range ground rent payable was £55 billed per annum. The lease came to a finish in 2073. Considering the 52 years as a residual term we estimated the premium to the freeholder for the lease extension to be within £30,400 and £35,200 not including fees.