Forest Hall leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease gets more expensive. It is the case that most Forest Hall tenants have the right to extend their lease by an additional 90 years under the 1993 Leasehold Reform Act. Where you are a leasehold owner in Forest Hall you would be well advised to investigate if your lease has between seventy and ninety years remaining. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension increases dramatically as part of the premium you pay is what is known as a marriage value
It is generally accepted that a residential leasehold with over 100 years remaining is worth roughly the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the property will be worth the same as a freehold for decades to come.
| 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. |
| Coventry Building Society | 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. |
| Halifax | Minimum 70 years from the date 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. |
| 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. |
The conveyancers that we work with undertake Forest Hall 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.
Last Autumn Ibrahim, started to get near to the eighty-year threshold with the lease on his garden apartment in Forest Hall. In buying his flat twenty years previously, the lease term was of little interest. Fortunately, he recognised he needed to take steps soon on Extending the lease. Ibrahim was able to extend his lease at the eleventh hour last July. Ibrahim and the landlord subsequently agreed on a premium of £5,500 . If he not met the deadline, the premium would have gone up by a minimum £875.
Mrs C Kelly acquired a ground floor flat in Forest Hall in October 1998. We are asked if we could approximate the premium would be for a 90 year extension to my lease. Similar flats in Forest Hall with a long lease were worth £285,000. The mid-range amount of ground rent was £45 billed per annum. The lease elapsed on 5 May 2098. Having 72 years outstanding we calculated the premium to the freeholder for the lease extension to be within £12,400 and £14,200 not including costs.
In 2010 we were approached by Dr Connor Michel who, having purchased a studio apartment in Forest Hall in January 2010. We are asked if we could estimate the compensation to the landlord would be to prolong the lease by a further 90 years. Identical properties in Forest Hall with 100 year plus lease were in the region of £233,200. The average ground rent payable was £60 invoiced annually. The lease came to a finish in 2087. Considering the 61 years unexpired we approximated the premium to the freeholder for the lease extension to be within £22,800 and £26,400 not including professional charges.