The re-sale value of a leasehold property in Fairwater depends on how long the lease has remaining. If it is close to or less than 80 years you should expect difficulties on re-sale, so it is recommended to arrange for the lease to be extended before buying. It is preferable to commence the lease extension process when a lease still has 82 years to run so that a lease extension can be addressed ahead of the eighty year cut off point. Leasehold Reform legislation enables Fairwater qualifying lessees to an additional term of 90 years on top of the unexpired term, at a peppercorn rent (zero ground rent). The reason of the valuation is to determine the amount payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold premises in Fairwater with in excess of 100 years outstanding on the lease are often referred to as ‘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 to be gained by buying the freehold unless savings on ground rent and estate charges merit it.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Godiva Mortgages | 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. |
| 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. |
| 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. |
Engaging our service will provide you increased control over the value of your Fairwater leasehold, as your property will be more valuable and marketable in terms of lease length should you decide to sell. The conveyancing solicitors that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
In recent months Aiden, started to get close to the eighty-year threshold with the lease on his one bedroom flat in Fairwater. In buying his property two decades ago, the unexpired term was of minimal significance. As luck would have it, he became aware that he would imminently be paying an inflated amount for a lease extension. Aiden arranged for a lease extension just in the nick of time in September. Aiden and the freeholder via the managing agents subsequently settled on sum of £5,500 . If the lease had descended lower than eighty years, the amount would have gone up by at least £900.
In 2009 we were contacted by Ms Ashleigh Rodríguez who, having purchased a one bedroom flat in Fairwater in November 2007. We are asked if we could approximate the compensation to the landlord could be to prolong the lease by 90 years. Comparative properties in Fairwater with a long lease were worth £295,000. The average ground rent payable was £50 collected every twelve months. The lease came to a finish on 26 August 2099. Given that there were 75 years as a residual term we calculated the compensation to the freeholder to extend the lease to be within £8,600 and £9,800 not including costs.
Last February we were phoned by Mrs G Adams , who bought a garden flat in Fairwater in October 2003. We are asked if we could shed any light on how much (roughly) premium would be for a 90 year extension to my lease. Identical premises in Fairwater with an extended lease were in the region of £250,400. The mid-range ground rent payable was £65 invoiced every twelve months. The lease terminated in 2088. Taking into account 64 years remaining we calculated the compensation to the landlord to extend the lease to be within £19,000 and £22,000 plus legals.