Unfortunately that a Frome 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 reduction being disguised by increases in the Frome property prices.Once your lease gets to 85ish years, you should start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease falls under eighty years - otherwise a higher premium will be payable. The majority of flat owners in Frome will be able to extend under the legislation; however a lawyer will be able to confirm whether you are eligibility. 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 conveyancer for the duration of the process.
Leasehold residencies in Frome with in excess of 100 years left 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 premises. In such circumstances there is often little to be gained by purchasing the freehold unless savings on ground rent and service charges merit 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. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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 conveyancing solicitors that we work with handle Frome 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 lawyer we work with provide it.
Half a year ago Nathaniel, started to get near to the 80-year threshold with the lease on his basement flat in Frome. Having purchased his flat twenty years ago, the length of the lease was of minimal significance. by good luck, he became aware that he would soon be paying an inflated amount for Extending the lease. Nathaniel was able to extend his lease just in the nick of time in April. Nathaniel and the freeholder ultimately settled on the final figure of £6,000 . If the lease had gone lower than eighty years, the sum would have gone up by at least £925.
Last Spring we were approach by Mr Oliver François , who acquired a purpose-built flat in Frome in May 1997. The dilemma was if we could estimate the compensation to the landlord could be to prolong the lease by an additional years. Identical premises in Frome with 100 year plus lease were worth £285,000. The mid-range ground rent payable was £45 invoiced quarterly. The lease expired on 11 October 2097. Taking into account 72 years outstanding we estimated the compensation to the freeholder to extend the lease to be within £12,400 and £14,200 plus legals.
Last Summer we were contacted by Dr L Moreau , who purchased a studio flat in Frome in August 2010. The question was if we could approximate the premium would likely be for a 90 year lease extension. Comparative homes in Frome with a long lease were worth £233,200. The average ground rent payable was £60 billed monthly. The lease lapsed in 2086. Having 61 years unexpired we calculated the premium to the landlord for the lease extension to be between £22,800 and £26,400 exclusive of expenses.