Earley leases on residential properties are gradually losing value. Where your lease has about 90 years remaining, you should start thinking about a lease extension. If lease term is less than eighty years, you will then be required to pay 50% of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add to the property. Leasehold owners in Earley will usually be legally entitled to a lease extension; however a solicitor should be able confirm your eligibility. In certain cases you may not be entitled. There are prescribed timetables and procedures to follow once the process has started so it’s prudent to be guided by a conveyancing solicitor during the process.
It is conventional wisdom that a property with over 100 years remaining is worth approximately the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the premises 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 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Yorkshire 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. |
The lawyers that we work with undertake Earley 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.
During the course of the last few months Aaron, started to get close to the 80-year threshold with the lease on his ground floor flat in Earley. Having purchased his property two decades ago, the lease term was of no relevance. Fortunately, he became aware that he would soon be paying an escalated premium for a lease extension. Aaron extended the lease just under the wire in August. Aaron and the landlord in the end settled on sum of £6,000 . If he not met the deadline, the price would have increased by a minimum £1,150.
In 2009 we were approached by Mr C Miller who, having moved into a one bedroom apartment in Earley in June 2008. The dilemma was if we could approximate the price could be to extend the lease by a further 90 years. Identical homes in Earley with an extended lease were in the region of £300,000. The average ground rent payable was £50 invoiced yearly. The lease termination date was in 2100. Having 75 years left we estimated the premium to the freeholder to extend the lease to be between £8,600 and £9,800 not including costs.
Last Christmas we were contacted by Mr and Mrs. A Sánchez , who purchased a first floor flat in Earley in September 1997. We are asked if we could shed any light on how much (approximately) price could be for a ninety year lease extension. Comparative residencies in Earley with an extended lease were worth £250,400. The average ground rent payable was £65 invoiced annually. The lease concluded on 22 March 2089. Considering the 64 years left we estimated the compensation to the landlord for the lease extension to be within £19,000 and £22,000 not including expenses.