Unfortunately that a Harlech residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the first few years due to the depreciation being disguised by increases in the Harlech 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 lower than eighty years - otherwise a higher amount will be payable. Most flat owners in Harlech will be able to extend under the legislation; however a lawyer should be able to confirm whether you are eligibility. In some cases you may not be entitled. There are also strict timeframes and procedures to follow once the process has commenced and you will need to be guided by your conveyancer throughout the formalities.
It is conventional wisdom that a property with more than 100 years remaining 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.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Halifax | 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Engaging our service gives you enhanced control over the value of your Harlech leasehold, as your property will be more valuable and marketable in terms of lease length should you wish to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
During the course of the last few months Jayden, came very near to the 80-year threshold with the lease on his one bedroom flat in Harlech. Having purchased his flat 18 years ago, the length of the lease was of no interest. As luck would have it, it dawned on him that he would soon be paying an escalated premium for Extending the lease. Jayden was able to extend his lease at the eleventh hour last May. Jayden and the landlord who owned the flat above ultimately settled on a premium of £5,500 . If he not met the deadline, the price would have gone up by at least £950.
Last Spring we were e-mailed by Mr G Vincent , who moved into a first floor apartment in Harlech in September 2004. The dilemma was if we could approximate the compensation to the landlord could be to extend the lease by an additional years. Identical premises in Harlech with an extended lease were valued about £290,000. The average ground rent payable was £45 billed yearly. The lease terminated on 16 May 2097. Taking into account 72 years as a residual term we calculated the compensation to the freeholder to extend the lease to be within £11,400 and £13,200 exclusive of fees.
Ms N Mason owned a one bedroom apartment in Harlech in August 1996. The question was if we could approximate the compensation to the landlord would likely be for a ninety year lease extension. Comparative properties in Harlech with a long lease were in the region of £233,200. The average ground rent payable was £60 billed quarterly. The lease elapsed on 16 September 2086. Considering the 61 years left we estimated the compensation to the landlord to extend the lease to be between £22,800 and £26,400 plus fees.