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Main reasons to start your Gwernaffield lease extension


Main reasons to start your Gwernaffield lease extension today:

A Gwernaffield lease depreciates with the years remaining on the lease.

Gwernaffield residential property held on a long lease is a wasting asset as the leaseholder only owns the property for a set term.

Gwernaffield property with a lease extension is almost the same value as a freehold

It is generally considered that a residential leasehold with over one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 30 years left, the property will be equivalent in value to a freehold for many years ahead.

Banks and Building Societies will not grant a mortgage with a short lease

Nearly all mortgage lenders require a lengthy amount of time remaining on a leasehold residence before they will consider providing a mortgage on it. Regardless of whether you require a mortgage, you should be mindful that it is likely that someone wishing to buy your property in the future might well do, so in the event that they can't get a mortgage, then the value of your property will likely be adversely impacted. Since 2008 most banks and building societies have increased the required minimum lease length that they are prepared to lend on

Lender Requirement
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.
Leeds Building Society 85 years remaing from the start 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
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to 5 years
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- Starting Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than 5 years
- Ground Rent escalation less than or equal to RPI

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years
Yorkshire 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.

What makes us experts in Gwernaffield lease extensions?

The conveyancing solicitors that we work with procure Gwernaffield 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.

Gwernaffield Lease Extension Case Studies:

Eliot, Gwernaffield, Flintshire,

Eliot owned a conversion apartment in Gwernaffield being sold with a lease of a few days over 59 years outstanding. Eliot informally contacted his landlord a well known Bristol-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years subject to a rise in the rent to £125 yearly. Ordinarily, ground rent would not be payable on a lease extension were Eliot to exercise his statutory right. Eliot procured expert advice and secured satisfactory resolution informally and sell the flat.

Gwernaffield case:

Ms C Rodríguez owned a studio flat in Gwernaffield in October 1996. The question was if we could estimate the premium would be for a ninety year extension to my lease. Comparative residencies in Gwernaffield with a long lease were in the region of £200,000. The mid-range ground rent payable was £50 billed every twelve months. The lease elapsed in 2099. Taking into account 77 years left we approximated the compensation to the freeholder to extend the lease to be between £8,600 and £9,800 not including legals.

Gwernaffield case:

In 2014 we were called by Mr and Mrs. H Morris who, having moved into a basement flat in Gwernaffield in January 1996. The question was if we could shed any light on how much (roughly) premium could be for a 90 year lease extension. Comparative residencies in Gwernaffield with an extended lease were valued around £265,200. The average ground rent payable was £65 collected per annum. The lease concluded on 13 September 2088. Taking into account 66 years unexpired we estimated the compensation to the landlord for the lease extension to be within £15,200 and £17,600 plus expenses.