For anyone whose High Peak flat is held on a long lease, the message is clear – if you do nothing, your property will ultimately revert to the freeholder, leaving you empty-handed. The shorter the lease the lower the value of the property and the more expensive it will be to obtain a lease extension.
It is conventional wisdom that a residential leasehold with more than 100 years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Using our service gives you enhanced control over the value of your High Peak leasehold, as your property will be more valuable and saleable in terms of 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.
Luca owned a studio flat in High Peak being marketed with a lease of a few days over sixty years outstanding. Luca informally approached his landlord a well known local-based freehold company for a lease extension. The freeholder was prepared to give an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent initially set at £200 per annum and doubled every twenty five years thereafter. No ground rent would be payable on a lease extension were Luca to exercise his statutory right. Luca obtained expert advice and was able to make a more informed judgement and handle with the matter and ending up with a market value flat.
Last March we were phoned by Dr Kayleigh Robinson , who moved into a garden flat in High Peak in May 2006. We are asked if we could estimate the price would likely be to prolong the lease by a further 90 years. Identical properties in High Peak with a long lease were valued around £246,800. The mid-range ground rent payable was £60 billed per annum. The lease elapsed on 17 November 2075. Given that there were 50 years left we approximated the premium to the landlord to extend the lease to be within £44,700 and £51,600 not including fees.
In 2011 we were called by Dr Lucas Wilson who, having owned a recently refurbished flat in High Peak in June 2005. The question was if we could approximate the premium could be to prolong the lease by 90 years. Comparative homes in High Peak with a long lease were worth £208,200. The average amount of ground rent was £65 billed yearly. The lease concluded on 11 January 2086. Given that there were 61 years outstanding we calculated the premium to the freeholder to extend the lease to be between £20,000 and £23,000 plus expenses.