The market value of a leasehold property in Eccles is impacted by how long the lease has remaining. If it is near to or fewer than 80 years you should envisage problems on re-sale, so it is advisable to arrange for the lease to be extended before purchasing. Ideally one should start the process of extending the lease is when a lease still has 82 years remaining so that formalities can be finalised ahead of the eighty year threshold. Statute enables Eccles qualifying lessees to a ninety year extension added to their residual lease term (ie if your lease has 50 years left the statutory lease extension will provide a new term of 140 years). The intention of the valuation is to determine the sum payable by the lessee to the freeholder for the purchase of the lease extension.
Leasehold premises in Eccles with more than one hundred years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little upside in buying the freehold unless savings on ground rent and estate charges warrant it.
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The conveyancers that we work with procure Eccles 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.
Subsequent to lengthy negotiations with the freeholder of her studio flat in Eccles, Mia commenced the lease extension process just as her lease was nearing the all-important eighty-year mark. The legal work completed in October 2013. The freeholder’s charges were negotiated to a tad over 600 pounds.
Last August we were contacted by Mrs O Ricardo , who bought a purpose-built flat in Eccles in July 2000. The question was if we could estimate the price would likely be to prolong the lease by 90 years. Comparative premises in Eccles with an extended lease were in the region of £295,000. The mid-range ground rent payable was £45 billed monthly. The lease terminated in 2099. Given that there were 74 years left we estimated the premium to the freeholder for the lease extension to be within £8,600 and £9,800 plus professional charges.
Last Summer we were called by Dr Caleb Jones , who took over the lease of a one bedroom flat in Eccles in January 2006. The question was if we could approximate the compensation to the landlord would be for a 90 year lease extension. Comparable flats in Eccles with a long lease were valued about £243,000. The mid-range ground rent payable was £65 collected yearly. The lease concluded on 9 March 2088. Taking into account 63 years as a residual term we estimated the compensation to the freeholder for the lease extension to be between £20,000 and £23,000 not including fees.