Heath leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease becomes more expensive. Legislation has been in place for sometime now allowing qualifying Heath residential leaseholders to extend the terms of long leases. Where you are a leasehold owner in Heath you really ought to see if your lease has between seventy and ninety years remaining. In particular once the remaining lease term slips under 80 years, the premium due on any lease extension increases dramatically as an element of the premium you pay is what is known as a marriage value
It is conventional wisdom that a residential leasehold with over one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the property will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Bank of 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. |
| 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 conveyancers that we work with undertake Heath 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.
Harry owned a 2 bedroom flat in Heath being marketed with a lease of fraction over sixty years unexpired. Harry on an informal basis spoke with his freeholder being a well known London-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years on the basis of a new rent to start with set at £100 per annum and doubled every twenty five years thereafter. No ground rent would be payable on a lease extension were Harry to exercise his statutory right. Harry procured expert advice and was able to make a more informed judgement and deal with the matter and sell the property.
In 2012 we were e-mailed by Mr and Mrs. G Ramírez who, having acquired a one bedroom apartment in Heath in May 2007. We are asked if we could approximate the compensation to the landlord would likely be for a ninety year extension to my lease. Identical premises in Heath with a long lease were valued around £225,800. The average amount of ground rent was £60 invoiced every twelve months. The lease came to a finish on 3 October 2084. Taking into account 60 years left we approximated the premium to the freeholder to extend the lease to be within £25,700 and £29,600 not including legals.
In 2012 we were approached by Mr and Mrs. C Watson who, having was assigned a lease of a purpose-built flat in Heath in February 1999. We are asked if we could shed any light on how much (approximately) premium could be for a 90 year lease extension. Similar homes in Heath with 100 year plus lease were valued around £210,000. The average amount of ground rent was £50 billed quarterly. The lease expired in 2104. Given that there were 80 years outstanding we estimated the compensation to the freeholder for the lease extension to be between £8,600 and £9,800 not including expenses.