Headington residential property owned on a long lease is a wasting asset as the leaseholder only owns the property for a period of years.
It is conventional wisdom that a property with over 100 years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional 90 years added to any lease with more than 35 years left, the premises will be worth the same as a freehold for many years ahead.
| 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; |
| 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 remaining from the start 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. |
| 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. |
Irrespective of whether you are a tenant or a freeholder in Headington,the lease extension solicitors that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Headington valuers.
Lewis was the the leasehold owner of a high value flat in Headington being sold with a lease of a little over 61 years remaining. Lewis informally spoke with his landlord a well known Manchester-based freehold company for a lease extension. The freeholder indicated a willingness to grant an extension taking the lease to 125 years subject to an increased rent to £50 annually. No ground rent would be payable on a lease extension were Lewis to invoke his statutory right. Lewis obtained expert legal guidance and was able to make an informed decision and handle with the matter and ending up with a market value flat.
Mr and Mrs. W Harris owned a first floor apartment in Headington in May 1997. We are asked if we could shed any light on how much (roughly) premium could be for a 90 year extension to my lease. Comparative premises in Headington with a long lease were valued around £168,800. The average amount of ground rent was £60 invoiced annually. The lease ended in 2080. Considering the 55 years left we estimated the compensation to the freeholder for the lease extension to be within £31,400 and £36,200 plus fees.
Last month we were called by Mr and Mrs. J Cooper , who moved into a garden apartment in Headington in July 1998. We are asked if we could approximate the compensation to the landlord would likely be for a 90 year lease extension. Identical residencies in Headington with 100 year plus lease were in the region of £235,200. The mid-range ground rent payable was £45 billed monthly. The lease ended in 2091. Considering the 66 years outstanding we approximated the compensation to the freeholder for the lease extension to be between £12,400 and £14,200 exclusive of legals.