It’s a harsh certainty that a Freshwater residential lease is a deteriorating asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the early years due to the depreciation being disguised by increases in the Freshwater property prices.Once your lease nears 85ish years, you need to start considering a lease extension. If the number of years remaining falls below eighty years, you will end up paying half of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. The marriage fee is the amount of additional value that a lease extension will add the property Most flat owners in Freshwater will be able to extend under the legislation; however a conveyancing solicitor will be able to clarify if you qualify for an extension. In some cases you may not qualify. There are also strict timetables and procedures to be adhered to once the process has commenced and you will need to be guided by your lawyer throughout the formalities.
Leasehold premises in Freshwater with in excess of one hundred years outstanding on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| 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; |
| 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. |
| 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. |
| 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. |
Regardless of whether you are a tenant or a freeholder in Freshwater,the lease extension lawyers that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Freshwater valuers.
16 months ago Felix, came seriously near to the eighty-year threshold with the lease on his first floor flat in Freshwater. Having bought his home two decades ago, the unexpired term was of minimal bearing. Thankfully, it dawned on him that he would soon be paying an escalated premium for Extending the lease. Felix arranged for a lease extension at the eleventh hour last March. Felix and the landlord in the end agreed on a premium of £5,000 . If he not met the deadline, the premium would have become more costly by at least £875.
In 2014 we were contacted by Dr P Wright who, having acquired a ground floor apartment in Freshwater in January 2009. We are asked if we could estimate the premium would be for a 90 year lease extension. Comparative residencies in Freshwater with a long lease were valued around £256,600. The mid-range amount of ground rent was £60 collected quarterly. The lease came to a finish in 2077. Considering the 52 years remaining we estimated the compensation to the landlord for the lease extension to be between £41,800 and £48,400 plus costs.
Mr and Mrs. L White bought a first floor apartment in Freshwater in June 1997. The dilemma was if we could estimate the premium would be for a ninety year lease extension. Comparative flats in Freshwater with a long lease were in the region of £218,000. The mid-range amount of ground rent was £45 invoiced yearly. The lease ended on 11 April 2088. Having 63 years unexpired we estimated the compensation to the landlord for the lease extension to be within £17,100 and £19,800 not including professional charges.