Gwernaffield leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease becomes more expensive. It is the case that most Gwernaffield tenants have the right to extend their lease by an additional 90 years under the 1993 Leasehold Reform Act. If you are a leasehold owner in Gwernaffield you would be well advised to see if your lease has between seventy and ninety years remaining. In particular once the remaining lease term slips under eighty years, the amount payable for any lease extension sharply increases as an element of the premium you pay is what is known as a marriage value
It is conventional wisdom that a property with over 100 years remaining is worth roughly the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The lawyers that we work with handle 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 conveyancing solicitor we work with provide it.
Off the back of unsuccessful discussions with the freeholder of her studio flat in Gwernaffield, Bethany initiated the lease extension process as the eighty year threshold was rapidly nearing. The lease extension was concluded in July 2006. The freeholder’s charges were restricted to slightly above 700 pounds.
Last Spring we were phoned by Mr and Mrs. H Taylor , who completed a one bedroom apartment in Gwernaffield in March 2008. The question was if we could approximate the compensation to the landlord could be for a 90 year lease extension. Identical residencies in Gwernaffield with a long lease were worth £208,600. The mid-range ground rent payable was £60 invoiced per annum. The lease ran out in 2082. Having 57 years remaining we calculated the premium to the landlord to extend the lease to be within £30,400 and £35,200 exclusive of legals.
In 2012 we were contacted by Ms Jodie Phillips who, having owned a studio flat in Gwernaffield in October 2008. We are asked if we could estimate the premium would be to prolong the lease by 90 years. Comparable residencies in Gwernaffield with an extended lease were worth £200,000. The mid-range ground rent payable was £50 billed monthly. The lease lapsed on 27 January 2102. Given that there were 77 years left we calculated the compensation to the landlord to extend the lease to be between £8,600 and £9,800 not including fees.