Unfortunately that a Great Shelford residential lease is a deteriorating 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 Great Shelford 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 slips under 80 years - otherwise a higher amount will be payable. The majority of flat owners in Great Shelford will be able to extend under the legislation; however a conveyancer will be able to clarify whether you qualify for an extension. In some situations you may not qualify. There are also strict deadlines and procedures to follow once the process is initiated and you will need to be guided by your conveyancer for the duration of the process.
Leasehold properties in Great Shelford with over 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 property. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and estate 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| Coventry Building Society | A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Using our service will provide you better control over the value of your Great Shelford leasehold, as your property will be more valuable and saleable in terms of lease length should you want to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Last October Arthur, came seriously close to the eighty-year threshold with the lease on his two bedroom flat in Great Shelford. In buying his home 18 years ago, the unexpired term was of little concern. Fortunately, it dawned on him that he would imminently be paying way over the odds for a lease extension. Arthur arranged for a lease extension just under the wire last May. Arthur and the landlord who owned the flat above eventually agreed on sum of £5,500 . If the lease had slid lower than eighty years, the premium would have gone up by a minimum £1,100.
Last Christmas we were approach by Mr U Patel , who was assigned a lease of a one bedroom apartment in Great Shelford in February 2001. The question was if we could shed any light on how much (roughly) price could be for a ninety year lease extension. Comparative homes in Great Shelford with a long lease were valued about £242,600. The mid-range ground rent payable was £45 billed monthly. The lease lapsed on 21 March 2092. Given that there were 67 years outstanding we calculated the premium to the freeholder to extend the lease to be between £11,400 and £13,200 plus expenses.
In 2011 we were approached by Mr Aiden Brown who, having acquired a garden flat in Great Shelford in November 2007. We are asked if we could estimate the premium could be for a ninety year lease extension. Identical properties in Great Shelford with 100 year plus lease were in the region of £280,000. The average amount of ground rent was £55 collected annually. The lease finished on 15 May 2103. Considering the 78 years left we estimated the premium to the landlord to extend the lease to be within £13,300 and £15,400 exclusive of legals.