The re-sale value of a leasehold property in Hope Valley is impacted by how long the lease has remaining. If it is close to or less than 80 years you should envisage difficulties on re-sale, so it is recommended to arrange for a lease extension prior to buying. Ideally one should start the lease extension process when a lease still has 82 years unexpired so that all matters can be addressed ahead of the eighty year threshold. Statute enables Hope Valley qualifying lessees to a 90 year extension added to their residual lease term (ie if your lease has fifty years left the statutory lease extension will provide a new term of 140 years). The purpose of the valuation is to arrive at an opinion of the sum payable by the lessee to the freeholder for the acquisition of the lease extension.
It is generally accepted that a property with more than 100 years remaining is worth approximately the same as a freehold. Where an further 90 years added to all but the shortest lease, the residence will be worth the same as a freehold for many years ahead.
| 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. |
| 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; |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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 |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with handle Hope Valley lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The conveyancer we work with provide it.
During the course of the last few months Sebastian, came dangerously close to the eighty-year threshold with the lease on his two bedroom apartment in Hope Valley. In buying his home two decades ago, the lease term was of minimal importance. Luckily, he became aware that he would imminently be paying an escalated premium for Extending the lease. Sebastian arranged for a lease extension at the eleventh hour in April. Sebastian and the freeholder ultimately agreed on sum of £5,500 . If the lease had descended below 80 years, the price would have gone up by at least £1,050.
In 2009 we were phoned by Mr and Mrs. H Jackson who, having took over the lease of a ground floor apartment in Hope Valley in February 2008. The question was if we could approximate the price would be for a 90 year extension to my lease. Comparative premises in Hope Valley with 100 year plus lease were in the region of £290,000. The average amount of ground rent was £45 billed annually. The lease terminated on 7 July 2098. Having 73 years outstanding we calculated the premium to the landlord to extend the lease to be between £9,500 and £11,000 exclusive of expenses.
In 2009 we were phoned by Mr and Mrs. U Howard who, having acquired a first floor flat in Hope Valley in January 2009. The question was if we could estimate the compensation to the landlord could be for a 90 year extension to my lease. Similar homes in Hope Valley with an extended lease were in the region of £240,600. The mid-range amount of ground rent was £60 invoiced monthly. The lease lapsed on 8 November 2087. Given that there were 62 years unexpired we approximated the premium to the landlord for the lease extension to be between £21,900 and £25,200 plus legals.