It’s a harsh truth that a Grasmere residential lease is a deteriorating 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 Grasmere property market.Once your lease gets to 85ish years, you should start thinking about 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 under 80 years - otherwise a higher premium will be payable. Most flat owners in Grasmere will be able to extend under the legislation; however a conveyancer should be able to clarify whether you are eligibility. In some cases you may not qualify. There are also strict deadlines and procedures to follow once the process is instigated and you will need to be guided by your lawyer from beginning to end of the process.
Leasehold premises in Grasmere with more than one hundred 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 situations there is often little upside in buying the reversionary interest unless savings on ground rent and estate charges justify it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Lloyds TSB Scotland | Minimum 70 years from the date 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. |
| 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 |
The conveyancers that we work with procure Grasmere 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.
Jonathan owned a conversion flat in Grasmere being sold with a lease of a few days over 72 years remaining. Jonathan informally spoke with his freeholder a well known Bristol-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years subject to a new rent to start with set at £200 per annum and doubled every twenty five years thereafter. No ground rent would be due on a lease extension were Jonathan to exercise his statutory right. Jonathan obtained expert advice and secured satisfactory deal informally and readily saleable.
Mrs Hannah Davis bought a purpose-built apartment in Grasmere in April 2007. We are asked if we could shed any light on how much (approximately) premium would be to prolong the lease by 90 years. Comparable homes in Grasmere with 100 year plus lease were worth £290,000. The average amount of ground rent was £45 billed monthly. The lease concluded on 12 April 2099. Taking into account 73 years unexpired we calculated the premium to the landlord to extend the lease to be between £9,500 and £11,000 exclusive of fees.
Dr Alfie Rodríguez completed a ground floor apartment in Grasmere in July 2011. The question was if we could shed any light on how much (approximately) compensation to the landlord could be for a ninety year lease extension. Comparable premises in Grasmere with 100 year plus lease were in the region of £240,600. The average ground rent payable was £65 collected per annum. The lease terminated on 25 May 2088. Considering the 62 years unexpired we approximated the compensation to the freeholder to extend the lease to be within £21,900 and £25,200 exclusive of legals.