Heath Hayes leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease gets more expensive. Legislation has been in place for sometime now allowing qualifying Heath Hayes residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Heath Hayes you really ought to check if your lease has between seventy and 90 years left. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension increases dramatically as an element of the premium you pay is what is known as a marriage value
Leasehold properties in Heath Hayes with over 100 years unexpired on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| 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. |
| 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 procure Heath Hayes 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.
Off the back of lengthy discussions with the landlord of her garden flat in Heath Hayes, Sophia commenced the lease extension process just as her lease was nearing the all-important 80-year mark. The lease extension completed in February 2005. The landlord’s costs were kept to an absolute minimum.
In 2010 we were phoned by Mrs I André who, having took over the lease of a basement apartment in Heath Hayes in July 2002. We are asked if we could approximate the compensation to the landlord would be to prolong the lease by ninety years. Comparable homes in Heath Hayes with an extended lease were valued around £285,000. The mid-range amount of ground rent was £45 invoiced quarterly. The lease ran out in 2097. Considering the 71 years outstanding we estimated the premium to the landlord to extend the lease to be within £12,400 and £14,200 exclusive of legals.
Last Summer we were e-mailed by Mr and Mrs. T Jones , who was assigned a lease of a newly refurbished flat in Heath Hayes in June 1999. We are asked if we could approximate the price would be to extend the lease by a further 90 years. Comparable flats in Heath Hayes with an extended lease were in the region of £225,800. The average amount of ground rent was £60 invoiced yearly. The lease concluded in 2086. Having 60 years outstanding we calculated the compensation to the landlord to extend the lease to be between £25,700 and £29,600 not including professional charges.