The value of Freshwater leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of extending the lease can increase substantially once the unexpired lease term is less than 80 years
Leasehold properties in Freshwater with more than one hundred years remaining on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little to be gained by buying the freehold unless savings on ground rent and estate 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. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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 handle Freshwater 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.
Ben was the the leasehold owner of a high value apartment in Freshwater being marketed with a lease of a little over 59 years unexpired. Ben informally spoke with his freeholder a well known local-based freehold company for a lease extension. The landlord was keen to give an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £125 yearly. Ordinarily, ground rent would not be due on a lease extension were Ben to invoke his statutory right. Ben obtained expert legal guidance and secured satisfactory deal informally and ending up with a market value flat.
Last Christmas we were phoned by Dr R Martinez , who acquired a one bedroom flat in Freshwater in November 2012. The question was if we could estimate the price would likely be for a 90 year lease extension. Identical premises in Freshwater with a long lease were valued around £270,000. The average amount of ground rent was £55 billed quarterly. The lease expired on 17 January 2101. Considering the 76 years remaining we calculated the premium to the landlord to extend the lease to be within £9,500 and £11,000 plus legals.
Mr Tyler Mitchell owned a basement flat in Freshwater in April 2011. The question was if we could approximate the premium would be to extend the lease by 90 years. Comparative flats in Freshwater with 100 year plus lease were in the region of £176,200. The average ground rent payable was £65 collected annually. The lease ended in 2081. Considering the 56 years remaining we calculated the premium to the freeholder for the lease extension to be within £29,500 and £34,000 exclusive of expenses.