Highworth leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease gets more expensive. Legislation has been in place for sometime now which permits qualifying Highworth residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Highworth you should check if your lease has between 70 and ninety years left. In particular once the remaining lease term slips under eighty years, the premium due on any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
It is generally accepted that a property with in excess of one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 35 years unexpired, the property will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Godiva Mortgages | 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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. |
Engaging our service will provide you enhanced control over the value of your Highworth leasehold, as your property will be more valuable and saleable in terms of lease length should you wish to sell. The conveyancing solicitors that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
14 months ago Aarav, came very near to the 80-year threshold with the lease on his basement flat in Highworth. In buying his home two decades ago, the length of the lease was of minimal bearing. As luck would have it, he recognised he would soon be paying way over the odds for a lease extension. Aarav was able to extend his lease just in the nick of time in June. Aarav and the landlord who owned the flat above eventually agreed on the final figure of £6,000 . If the lease had slipped lower than 80 years, the price would have become more exhorbitant by a minimum £950.
Mr Sam Rodríguez bought a basement flat in Highworth in November 1997. The question was if we could approximate the premium could be to extend the lease by an additional years. Identical properties in Highworth with an extended lease were worth £193,400. The average amount of ground rent was £65 billed annually. The lease concluded on 1 November 2085. Taking into account 59 years remaining we estimated the compensation to the landlord for the lease extension to be between £21,900 and £25,200 exclusive of legals.
In 2009 we were phoned by Dr Jennifer Torres who, having bought a ground floor flat in Highworth in September 2005. The question was if we could estimate the premium could be for a ninety year extension to my lease. Comparable premises in Highworth with a long lease were worth £250,000. The average ground rent payable was £50 invoiced annually. The lease end date was on 27 August 2096. Taking into account 70 years left we estimated the premium to the landlord to extend the lease to be between £9,500 and £11,000 exclusive of legals.