It’s an underpublicised truth that a Gloucester residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the loss of value being disguised by increases in the Gloucester property prices.Once your lease nears 85ish years, you need to start considering a lease extension. If the number of years remaining falls below 80 years, you will then be required to pay 50% of the property's 'marriage value' in addition to 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 The majority of leasehold owners in Gloucester will be able to extend under the legislation; however a conveyancer will be able to confirm whether you are eligibility. In some situations you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process is instigated and you will need to be guided by your conveyancer from beginning to end of the formalities.
Leasehold properties in Gloucester with in excess of 100 years unexpired on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth 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 estate charges warrant it.
| Lender | Requirement |
|---|---|
| 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancers that we work with undertake 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 Teddy, started to get near to the 80-year mark with the lease on his ground floor flat in Gloucester. Having purchased his flat 18 years ago, the length of the lease was of no relevance. As luck would have it, he became aware that he would soon be paying an escalated premium for Extending the lease. Teddy arranged for a lease extension at the eleventh hour last April. Teddy and the landlord who owned the flat above in the end agreed on an amount of £5,000 . If he not met the deadline, the premium would have gone up by at least £950.
Last Winter we were e-mailed by Dr Jamie Campbell , who bought a ground floor apartment in Gloucester in August 1995. The question was if we could approximate the premium would likely be for a 90 year extension to my lease. Comparable homes in Gloucester with 100 year plus lease were worth £189,000. The mid-range amount of ground rent was £55 invoiced every twelve months. The lease came to a finish on 5 April 2078. Taking into account 53 years left we approximated the premium to the freeholder to extend the lease to be between £28,500 and £33,000 exclusive of costs.
Mr A Simon was assigned a lease of a recently refurbished flat in Gloucester in April 2006. We are asked if we could estimate the premium could be to extend the lease by 90 years. Similar premises in Gloucester with an extended lease were in the region of £290,000. The average ground rent payable was £45 collected per annum. The lease finished on 5 May 2098. Given that there were 73 years left we approximated the compensation to the freeholder for the lease extension to be between £9,500 and £11,000 not including fees.