It’s a harsh certainty that a Gower residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the early years due to the deflation being disguised by increases in the Gower property market.Where your lease has approximately 90 years left, you need to 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 dips below eighty years - otherwise a higher premium will be payable. The majority of leasehold owners in Gower will be able to extend under the legislation; however a lawyer 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 follow once the process has commenced and you will need to be guided by your conveyancing solicitor throughout the process.
Leasehold residencies in Gower with over one hundred years remaining 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 situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and maintenance charges merit it.
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| 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 |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The conveyancing solicitors that we work with undertake Gower 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 conveyancing solicitor we work with provide it.
Trailing lengthy correspondence with the landlord of her garden flat in Gower, Rebecca commenced the lease extension process just as her lease was nearing the crucial eighty-year deadline. The lease extension was finalised in August 2007. The freeholder’s costs were kept to an absolute minimum.
Mr and Mrs. R Ricardo took over the lease of a one bedroom flat in Gower in April 2006. The dilemma was if we could approximate the premium could be to extend the lease by 90 years. Comparable residencies in Gower with a long lease were in the region of £250,000. The mid-range ground rent payable was £50 invoiced yearly. The lease terminated in 2094. Considering the 69 years remaining we approximated the premium to the freeholder to extend the lease to be between £9,500 and £11,000 plus fees.
Ms Melissa Patel completed a garden apartment in Gower in April 2003. We are asked if we could estimate the premium would likely be for a 90 year extension to my lease. Identical flats in Gower with a long lease were worth £285,000. The average ground rent payable was £55 invoiced per annum. The lease terminated in 2105. Given that there were 80 years left we estimated the compensation to the landlord for the lease extension to be within £12,400 and £14,200 plus fees.