When it comes to long leasehold premises in Great Shelford, you are actually purchasing an entitlement to reside in a property for a prescribed time frame. These days flat leases typically tend to be for 99 years or 125. Even though this may appear like a long period of time, you should consider extending the lease sooner as opposed to later. Accepted thinking is that the shorter the number of years is the cost of extending the lease becomes disproportionately greater especially once there are less than eighty years remaining. Leasehold owners in Great Shelford with a lease approaching 81 years unexpired should seriously consider extending it without delay. Once the lease term has less than eighty years left, under the current Act the landlord is entitled to calculate and demand a greater premium, based on a technical calculation, strangely termed as “marriage value” which is payable.
Leasehold premises in Great Shelford with more than 100 years unexpired 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 to be gained by buying the freehold unless savings on ground rent and estate charges warrant 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; |
| Godiva Mortgages | 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. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. For a Lifetime Mortgage, the term must be no less than 150 years minus the age of the Borrower. |
The conveyancers that we work with undertake Great Shelford 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.
Archie owned a studio apartment in Great Shelford being sold with a lease of a few days over 59 years left. Archie informally approached his freeholder being a well known London-based freehold company for a lease extension. The freeholder was prepared to give an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £50 per annum. No ground rent would be due on a lease extension were Archie to exercise his statutory right. Archie obtained expert advice and secured satisfactory deal informally and sell the property.
In 2009 we were contacted by Mr Luca James who, having acquired a one bedroom flat in Great Shelford in November 2004. The dilemma was if we could estimate the price would be to extend the lease by ninety years. Identical residencies in Great Shelford with 100 year plus lease were valued around £166,400. The mid-range ground rent payable was £60 invoiced yearly. The lease came to a finish on 5 October 2076. Considering the 54 years unexpired we calculated the compensation to the landlord to extend the lease to be between £32,300 and £37,400 exclusive of professional charges.
Last month we were phoned by Mr and Mrs. O Lewis , who took over the lease of a one bedroom flat in Great Shelford in September 2008. We are asked if we could estimate the premium could be to extend the lease by ninety years. Comparative properties in Great Shelford with 100 year plus lease were valued around £227,800. The average ground rent payable was £45 billed annually. The lease expiry date was in 2087. Having 65 years unexpired we calculated the premium to the freeholder to extend the lease to be within £13,300 and £15,400 not including professional charges.