The nearer a residential lease in Fairwater gets to zero years unexpired, the the greater the reduction in the value of the property. Where the lease has, in excess of 99 years remaining then this decrease may be negligible nevertheless there will become a point in time when a lease has fewer than eighty years unexpired as part of the premium you will incur is what is known as a marriage value. This could increase sharply the cost. It is the primary rational as to why you should consider extending sooner rather than later. Many flat owners in Fairwater will meet the qualifying criteria; however a lawyer will be able to advise if you are eligible to extend your lease. In limited situations you may not qualify, the most frequent reason being that you have not been the owner of the property for two years.
It is generally accepted that a property with more than 100 years remaining is worth roughly the equivalent as a freehold. Where an additional ninety years added to any lease with more than 35 years left, the premises will be equivalent in value to 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. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| 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. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The conveyancers that we work with handle Fairwater 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.
In 2014 Leo, came perilously close to the eighty-year threshold with the lease on his studio flat in Fairwater. Having purchased his home two decades ago, the unexpired term was of minimal importance. Fortunately, he realised he needed to take action soon on a lease extension. Leo extended the lease just under the wire in August. Leo and the freeholder via the management company eventually agreed on sum of £5,500 . If he not met the deadline, the premium would have gone up by a minimum £950.
Last January we were contacted by Mr and Mrs. B Williams , who completed a one bedroom flat in Fairwater in August 2008. The dilemma was if we could estimate the premium could be to prolong the lease by a further 90 years. Comparative flats in Fairwater with an extended lease were valued about £191,400. The mid-range ground rent payable was £55 invoiced annually. The lease elapsed on 22 September 2080. Taking into account 54 years outstanding we approximated the premium to the landlord to extend the lease to be within £34,200 and £39,600 plus professional charges.
In 2014 we were approached by Mr and Mrs. C Díaz who, having was assigned a lease of a first floor flat in Fairwater in June 2011. We are asked if we could estimate the compensation to the landlord would likely be for a ninety year extension to my lease. Similar flats in Fairwater with an extended lease were valued about £295,000. The mid-range ground rent payable was £45 billed quarterly. The lease end date was in 2100. Taking into account 74 years as a residual term we approximated the compensation to the freeholder for the lease extension to be between £8,600 and £9,800 plus expenses.