Fleet residential property held on a long lease is a depreciating asset because a leaseholder only owns the property for a set term.
It is conventional wisdom that a property with more than one hundred years remaining is worth roughly the equivalent as a freehold. Where an further 90 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 |
|---|---|
| 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 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; |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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. |
The conveyancing solicitors that we work with procure Fleet 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.
In the wake of 6 months of unsuccessful discussions with the landlord of her ground floor apartment in Fleet, Lauren started the lease extension process as the eighty year mark was fast advancing. The lease extension completed in September 2009. The landlord’s fees were restricted to about 600 GBP.
Mr and Mrs. S Simon acquired a one bedroom flat in Fleet in January 1997. The dilemma was if we could estimate the price could be to prolong the lease by a further 90 years. Comparable homes in Fleet with a long lease were in the region of £290,000. The average ground rent payable was £45 billed per annum. The lease ended on 3 June 2098. Given that there were 73 years left we approximated the premium to the landlord for the lease extension to be between £9,500 and £11,000 not including expenses.
In 2013 we were called by Mr and Mrs. S Bennett who, having acquired a ground floor apartment in Fleet in January 2007. We are asked if we could shed any light on how much (roughly) premium would be to prolong the lease by a further 90 years. Comparable residencies in Fleet with 100 year plus lease were worth £240,600. The mid-range ground rent payable was £60 billed per annum. The lease elapsed on 25 June 2087. Having 62 years unexpired we approximated the premium to the landlord for the lease extension to be between £21,900 and £25,200 not including professional charges.