Dunston 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. Most owners of residential leasehold property in Dunston enjoy rights under legislation to extend the terms of their leases. Where you are a leasehold owner in Dunston you really ought to investigate if your lease has between 70 and ninety years remaining. There are compelling reasons why a Dunston leaseholder with a lease having around 80 years remaining should take action to make sure that a lease extension is actioned without delay
It is generally considered that a residential leasehold with in excess of 100 years unexpired lease term is worth roughly the equivalent as a freehold. Where an further 90 years added to any lease with more than 45 years remaining, the property will be worth the same as a freehold for many years ahead.
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Regardless of whether you are a tenant or a freeholder in Dunston,the lease extension experts that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Dunston valuers.
Oscar owned a studio flat in Dunston on the market with a lease of just over 61 years unexpired. Oscar informally spoke with his landlord being a well known London-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to grant an extension taking the lease to 125 years subject to a new rent initially set at £100 per annum and doubled every twenty five years thereafter. No ground rent would be due on a lease extension were Oscar to exercise his statutory right. Oscar obtained expert advice and was able to make a more informed decision and deal with the matter and readily saleable.
In 2010 we were approached by Ms Katie Johnson who, having owned a recently refurbished flat in Dunston in November 2003. We are asked if we could estimate the price would likely be for a ninety year lease extension. Identical residencies in Dunston with an extended lease were valued about £216,000. The average amount of ground rent was £60 invoiced quarterly. The lease expired on 27 March 2084. Taking into account 58 years remaining we calculated the premium to the landlord to extend the lease to be between £28,500 and £33,000 plus costs.
Last month we were called by Mrs L García , who completed a first floor apartment in Dunston in January 2004. We are asked if we could shed any light on how much (roughly) compensation to the landlord would be to prolong the lease by ninety years. Similar flats in Dunston with 100 year plus lease were worth £200,000. The average ground rent payable was £50 billed quarterly. The lease terminated in 2104. Taking into account 78 years as a residual term we approximated the premium to the freeholder for the lease extension to be between £8,600 and £9,800 exclusive of fees.