Hermitage 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 your lease gets more expensive. Legislation has been in place for sometime now which entitles qualifying Hermitage residential leaseholders to extend the terms of long leases. Where you are a leasehold owner in Hermitage you must investigate if your lease has between 70 and 90 years remaining. In particular once the remaining lease term slips under 80 years, the amount payable for 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 property with in excess of 100 years remaining is worth roughly the same as a freehold. Where an additional ninety years added to all but the shortest lease, the property will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Chelsea 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. |
| 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. |
| Lloyds TSB 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
Regardless of whether you are a tenant or a freeholder in Hermitage,the lease extension lawyers 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 Hermitage valuers.
Subsequent to protracted negotiations with the landlord of her studio flat in Hermitage, Rachel initiated the lease extension process just as the lease was nearing the crucial eighty-year mark. The legal work was concluded in March 2005. The landlord’s charges were kept to an absolute minimum.
Ms U Hernández was assigned a lease of a purpose-built flat in Hermitage in July 1995. We are asked if we could shed any light on how much (roughly) price would be for a ninety year lease extension. Comparable premises in Hermitage with 100 year plus lease were in the region of £205,000. The mid-range amount of ground rent was £50 invoiced annually. The lease expired in 2104. Having 79 years left we estimated the premium to the landlord to extend the lease to be between £8,600 and £9,800 not including costs.
Last year we were called by Mr Tyler Hill , who moved into a one bedroom apartment in Hermitage in February 1996. We are asked if we could estimate the premium could be for a ninety year lease extension. Comparative flats in Hermitage with an extended lease were worth £275,000. The average ground rent payable was £65 invoiced annually. The lease finished in 2093. Given that there were 68 years as a residual term we calculated the premium to the freeholder for the lease extension to be between £13,300 and £15,400 exclusive of expenses.