Hornsea leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease gets more expensive. It is the case that most Hornsea tenants have the right to extend their lease by an additional ninety years by virtue of the 1993 Leasehold Reform Act. If you are a leasehold owner in Hornsea you should check if your lease has between 70 and ninety years left. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension increases dramatically as an element of the premium you will incur is what is known as a marriage value
It is conventional wisdom that a property with over one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the premises will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Engaging our service gives you enhanced control over the value of your Hornsea leasehold, as your property will be more valuable and marketable in respect of lease length should you wish to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Last year Thomas, started to get close to the eighty-year mark with the lease on his purpose- built apartment in Hornsea. In buying his flat two decades ago, the unexpired term was of little concern. by good luck, he became aware that he needed to take action soon on a lease extension. Thomas extended the lease just ahead of time last April. Thomas and the freeholder in the end agreed on sum of £5,500 . If he had missed the deadline, the sum would have become more costly by a minimum £1,050.
Dr Evan Vincent bought a one bedroom apartment in Hornsea in July 2011. The question was if we could shed any light on how much (roughly) premium would likely be to prolong the lease by ninety years. Comparable premises in Hornsea with a long lease were worth £260,000. The average ground rent payable was £50 invoiced yearly. The lease expired in 2099. Having 73 years left we estimated the compensation to the landlord for the lease extension to be between £9,500 and £11,000 exclusive of costs.
In 2010 we were called by Dr E Howard who, having moved into a studio flat in Hornsea in January 2009. The dilemma was if we could shed any light on how much (roughly) premium would likely be to extend the lease by 90 years. Comparable properties in Hornsea with an extended lease were in the region of £261,600. The mid-range ground rent payable was £60 collected quarterly. The lease ran out in 2078. Taking into account 52 years as a residual term we calculated the premium to the landlord to extend the lease to be between £39,000 and £45,000 not including professional charges.