Flackwell Heath Lease Extension - Free Consultation

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Why you should start your Flackwell Heath lease extension


Top reasons for lease extension now:

A Flackwell Heath lease depreciates with the years remaining on the lease.

It’s an underpublicised truth that a Flackwell Heath residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the depreciation being disguised by increases in the Flackwell Heath property market.Once your lease gets to 85ish years, you need to start thinking about a lease extension. If lease term dips below 80 years, you will then be required to pay half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property Most leasehold owners in Flackwell Heath will be able to extend under the legislation; however a conveyancing solicitor will be able to clarify whether you qualify for an extension. In some situations you may not qualify. There are also strict timetables and procedures to be adhered to once the process is initiated and you will need to be guided by your conveyancer from beginning to end of the formalities.

Flackwell Heath property with a lease extension is almost the same value as a freehold

Leasehold premises in Flackwell Heath with over one hundred 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 upside in buying the freehold unless savings on ground rent and maintenance charges warrant it.

Mortgage lenders will not grant a mortgage on a short lease

Lenders do not like short residential leases. You most probably experience difficulties where you want to sell your flat in Flackwell Heath if the remaining term of your lease is less than the criteria set by most lenders. Different mortgage companies have varying criteria but on the whole theyrequire a minimum remaining lease term of seventy years.

Lender Requirement
Bank of Scotland 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.
TSB Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to 5 years
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- Starting Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than 5 years
- Ground Rent escalation less than or equal to RPI

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years
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.

Get in touch with one of our Flackwell Heath lease extension solicitors or enfranchisement solicitors

The conveyancing solicitors that we work with undertake Flackwell Heath 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 conveyancer we work with provide it.

Flackwell Heath Lease Extension Case Studies:

Oscar, Flackwell Heath, Buckinghamshire,

Oscar was the the leasehold proprietor of a high value flat in Flackwell Heath on the market with a lease of fraction over 61 years remaining. Oscar informally contacted his freeholder a well known Bristol-based freehold company and enquired on a premium to extend the lease. The freeholder was prepared to grant an extension on non-statutory terms taking the lease to 125 years subject to a rise in the rent to £125 yearly. Ordinarily, ground rent would not be due on a lease extension were Oscar to exercise his statutory right. Oscar procured expert legal guidance and was able to make an informed decision and handle with the matter and ending up with a market value flat.

Flackwell Heath case:

Ms Danielle Patel bought a one bedroom flat in Flackwell Heath in August 2003. The question was if we could estimate the premium could be for a ninety year lease extension. Comparable properties in Flackwell Heath with an extended lease were worth £198,800. The average ground rent payable was £55 collected annually. The lease terminated on 28 November 2076. Having 55 years remaining we estimated the compensation to the freeholder for the lease extension to be within £33,300 and £38,400 plus professional charges.

Flackwell Heath case:

Dr Naomi Lefèvre moved into a one bedroom flat in Flackwell Heath in September 1999. We are asked if we could approximate the premium could be for a 90 year extension to my lease. Identical homes in Flackwell Heath with a long lease were in the region of £295,000. The mid-range ground rent payable was £45 billed quarterly. The lease came to a finish in 2096. Having 75 years remaining we approximated the compensation to the freeholder for the lease extension to be within £8,600 and £9,800 plus expenses.