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. |
| 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. |
Retaining our service gives you enhanced control over the value of your Heath leasehold, as your property will be more valuable and saleable in relation to the lease length should you wish to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Trailing protracted correspondence with the freeholder of her studio flat in Heath, Morgan commenced the lease extension process as the 80 year threshold was quickly approaching. The lease extension was concluded in October 2007. The landlord’s charges were restricted to about 450 GBP.
Last Christmas we were called by Dr F François , who completed a studio apartment in Heath in April 2006. We are asked if we could approximate the compensation to the landlord would be to extend the lease by 90 years. Identical homes in Heath with a long lease were in the region of £208,600. The mid-range amount of ground rent was £60 billed monthly. The lease expired on 18 June 2082. Given that there were 57 years left we estimated the premium to the landlord to extend the lease to be within £30,400 and £35,200 not including legals.
In 2009 we were called by Dr K Mercier who, having purchased a one bedroom flat in Heath in November 2003. The dilemma was if we could shed any light on how much (approximately) compensation to the landlord would be to extend the lease by an additional years. Similar premises in Heath with an extended lease were worth £200,000. The average amount of ground rent was £50 collected quarterly. The lease concluded on 17 July 2102. Given that there were 77 years outstanding we approximated the premium to the landlord to extend the lease to be within £8,600 and £9,800 plus costs.