Hilsea leases on residential properties are gradually decreasing in 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. It is the case that most Hilsea tenants have the right to extend their lease by an additional ninety years in accordance with the 1993 Leasehold Reform Act. If you are a leasehold owner in Hilsea you would be well advised to investigate if your lease has between 70 and ninety years remaining. In particular once the remaining lease term slips under 80 years, the cost of any lease extension sharply increases as part of the premium you pay is what is known as a marriage value
Leasehold residencies in Hilsea with more than 100 years outstanding on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and estate charges justify it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Leeds Building Society | 85 years remaining from the start 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. |
Regardless of whether you are a tenant or a landlord in Hilsea,the lease extension solicitors that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Hilsea valuers.
During the course of the last few months Owen, started to get near to the eighty-year mark with the lease on his studio apartment in Hilsea. In buying his home two decades ago, the lease term was of little significance. Fortunately, he noticed he needed to take steps soon on a lease extension. Owen was able to extend his lease just under the wire last April. Owen and the landlord eventually settled on the final figure of £5,000 . If the lease had descended below eighty years, the premium would have escalated by a minimum £850.
In 2011 we were e-mailed by Ms Jordan Davis who, having owned a ground floor apartment in Hilsea in October 1997. The question was if we could approximate the premium could be to prolong the lease by ninety years. Identical flats in Hilsea with an extended lease were valued about £205,000. The average amount of ground rent was £50 invoiced monthly. The lease elapsed on 17 June 2105. Given that there were 79 years as a residual term we calculated the premium to the landlord for the lease extension to be between £8,600 and £9,800 plus legals.
Last Christmas we were contacted by Dr Charlotte Allen , who completed a one bedroom flat in Hilsea in June 2003. We are asked if we could estimate the compensation to the landlord would likely be for a 90 year extension to my lease. Similar premises in Hilsea with 100 year plus lease were worth £275,000. The mid-range ground rent payable was £65 invoiced monthly. The lease terminated on 10 October 2094. Considering the 68 years outstanding we calculated the compensation to the landlord to extend the lease to be between £12,400 and £14,200 not including expenses.