Owning a flat usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. The lease will usually be granted for a fixed period of time , ordinarily 99 or 125 years, although we have witnessed longer and shorter terms in Gloucester. Inevitably, the period of lease left shortens as time goes by. This is often ignored and only becomes a problem when the property needs to be sold or re-mortgaged. The shorter the lease the lower the value of the property and the more expensive it will be to extend the lease. Qualifying long lease owners in Gloucester have the right to extend the lease for an additional 90 years under legislation. Do give careful attention before delaying your Gloucester lease extension. Putting off that expense now simply increases the price you will ultimately incur to extend your lease
It is generally considered that a residential leasehold with in excess of one hundred years remaining is worth approximately the equivalent as a freehold. Where an further ninety years added to any lease with more than 45 years remaining, the property will be worth the same as a freehold for decades to come.
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset 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 handle Gloucester 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.
Last year Joshua, started to get close to the eighty-year threshold with the lease on his leasehold flat in Gloucester. In buying his home twenty years previously, the lease term was of minimal interest. Thankfully, he noticed he would imminently be paying way over the odds for Extending the lease. Joshua extended the lease at the eleventh hour in June. Joshua and the freeholder subsequently settled on a premium of £5,500 . If the lease had slid to less than 80 years, the premium would have gone up by at least £1,125.
Mr Felix Mitchell was assigned a lease of a first floor apartment in Gloucester in November 1999. The dilemma was if we could approximate the premium could be to prolong the lease by ninety years. Similar properties in Gloucester with a long lease were valued around £196,400. The average ground rent payable was £55 billed yearly. The lease finished on 16 April 2080. Taking into account 54 years remaining we estimated the compensation to the landlord for the lease extension to be between £35,200 and £40,600 not including costs.
In 2010 we were e-mailed by Dr U Baker who, having bought a ground floor flat in Gloucester in January 1995. The dilemma was if we could shed any light on how much (roughly) compensation to the landlord could be for a ninety year lease extension. Comparative residencies in Gloucester with a long lease were valued about £295,000. The average amount of ground rent was £45 billed annually. The lease concluded in 2101. Given that there were 75 years left we approximated the premium to the freeholder for the lease extension to be within £8,600 and £9,800 not including legals.