Unfortunately that a Hatch and Old Basing residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the depreciation being disguised by increases in the Hatch and Old Basing property market.Once your lease nears 85ish years, you need to start considering a lease extension. If lease term slips below eighty years, you will end up paying half of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property The majority of flat owners in Hatch and Old Basing will be able to extend under the legislation; however a conveyancing solicitor will be able to confirm if you are eligibility. In some cases you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancer from beginning to end of the formalities.
It is conventional wisdom that a property with in excess of 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years in the future.
| 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; |
| Birmingham Midshires | 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. |
| 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 |
| 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. |
The lawyers that we work with handle Hatch and Old Basing 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 conveyancer we work with provide it.
Last October Aaron, started to get close to the eighty-year mark with the lease on his purpose- built flat in Hatch and Old Basing. In buying his property two decades ago, the length of the lease was of minimal interest. Thankfully, he realised he needed to take steps soon on Extending the lease. Aaron was able to extend his lease just ahead of time in September. Aaron and the landlord who owned the flat above ultimately agreed on sum of £5,000 . If the lease had slipped lower than 80 years, the premium would have escalated by at least £900.
In 2010 we were approached by Mr and Mrs. P Lewis who, having purchased a purpose-built apartment in Hatch and Old Basing in September 2000. The question was if we could approximate the compensation to the landlord would likely be for a 90 year lease extension. Comparative properties in Hatch and Old Basing with an extended lease were valued about £176,200. The mid-range ground rent payable was £65 collected quarterly. The lease lapsed on 22 July 2081. Considering the 56 years unexpired we approximated the premium to the freeholder for the lease extension to be between £29,500 and £34,000 not including legals.
In 2014 we were contacted by Mrs K Bell who, having moved into a one bedroom flat in Hatch and Old Basing in September 2007. We are asked if we could shed any light on how much (approximately) premium would likely be for a 90 year extension to my lease. Identical homes in Hatch and Old Basing with a long lease were valued around £242,600. The mid-range amount of ground rent was £45 collected monthly. The lease finished in 2092. Having 67 years remaining we calculated the premium to the freeholder for the lease extension to be between £11,400 and £13,200 exclusive of fees.