Freshwater 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 becomes more expensive. Legislation has been in place for sometime now allowing qualifying Freshwater residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Freshwater you should check if your lease has between 70 and 90 years left. In particular once the remaining lease term slips under eighty years, the premium due on any lease extension increases dramatically as part of the premium you pay is what is known as a marriage value
Leasehold properties in Freshwater with in excess of 100 years remaining on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little upside in purchasing the freehold unless savings on ground rent and service charges warrant it.
| 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Retaining our service gives you enhanced control over the value of your Freshwater leasehold, as your property will be more valuable and saleable in relation to the lease length should you decide to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
David owned a 2 bedroom apartment in Freshwater being marketed with a lease of fraction over sixty years left. David on an informal basis approached his landlord being a well known local-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to extend the lease to 125 years subject to a new rent to start with set at £150 per annum and increase every 25 years thereafter. No ground rent would be payable on a lease extension were David to invoke his statutory right. David obtained expert advice and was able to make an informed decision and deal with the matter and ending up with a market value flat.
In 2013 we were phoned by Mr and Mrs. P André who, having acquired a ground floor apartment in Freshwater in May 2010. We are asked if we could approximate the price would likely be to prolong the lease by an additional years. Similar residencies in Freshwater with 100 year plus lease were in the region of £183,600. The mid-range ground rent payable was £65 billed per annum. The lease expired on 13 October 2082. Having 57 years remaining we approximated the premium to the landlord to extend the lease to be within £28,500 and £33,000 plus professional charges.
Last Spring we were e-mailed by Ms Phoebe Wright , who took over the lease of a first floor flat in Freshwater in November 2009. We are asked if we could estimate the premium would be for a 90 year lease extension. Identical flats in Freshwater with a long lease were worth £245,000. The mid-range amount of ground rent was £45 billed per annum. The lease ended on 5 October 2093. Having 68 years unexpired we approximated the compensation to the freeholder to extend the lease to be within £9,500 and £11,000 plus expenses.