The market value of a leasehold property in Heath depends on how many years the lease has left to run. If it is near to or fewer than eighty years you should anticipate difficulties on re-sale, so it is recommended to arrange for a lease extension ahead of buying. It is preferable to start the lease extension process when the lease still has 82 years remaining so that formalities can be finalised well before the 80 year cut off point. Leasehold Reform legislation enables Heath qualifying lessees to an additional term of ninety years over and above the existing term, at a peppercorn rent (zero ground rent). The purpose of the valuation is to arrive at an opinion of the premium payable by the lessee to the freeholder for the purchase of the lease extension.
Leasehold properties in Heath with in excess of one hundred years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and service charges merit it.
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancing solicitors that we work with handle 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 conveyancer we work with provide it.
Ollie owned a high value flat in Heath being marketed with a lease of a little over fifty eight years left. Ollie on an informal basis approached his landlord being a well known local-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to extend the lease to 125 years subject to a rise in the rent to £50 annually. No ground rent would be payable on a lease extension were Ollie to exercise his statutory right. Ollie obtained expert legal guidance and was able to make a more informed decision and handle with the matter and ending up with a market value flat.
Last Summer we were approach by Mr and Mrs. O Bailey , who acquired a recently refurbished flat in Heath in January 2012. The question was if we could approximate the price could be to extend the lease by an additional years. Comparable residencies in Heath with 100 year plus lease were worth £208,600. The average amount of ground rent was £60 billed quarterly. The lease ran out in 2082. Having 57 years left we approximated the compensation to the freeholder for the lease extension to be within £30,400 and £35,200 plus professional charges.
In 2011 we were approached by Dr Louise Ricardo who, having took over the lease of a ground floor apartment in Heath in July 2003. We are asked if we could estimate the premium would be to extend the lease by ninety years. Comparative residencies in Heath with an extended lease were in the region of £200,000. The mid-range amount of ground rent was £50 billed monthly. The lease finished in 2102. Considering the 77 years unexpired we approximated the premium to the freeholder to extend the lease to be within £8,600 and £9,800 not including legals.