Hornsea residential property owned on a long lease is a wasting asset because a leaseholder merely owns the property for a period of years.
Leasehold premises in Hornsea with in excess of 100 years outstanding on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little upside in buying the freehold unless savings on ground rent and service charges warrant it.
| 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; |
| 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. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancing solicitors that we work with procure Hornsea 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 Callum, started to get near to the 80-year threshold with the lease on his basement flat in Hornsea. Having bought his property twenty years ago, the unexpired term was of minimal relevance. Fortunately, he noticed he needed to take action soon on Extending the lease. Callum extended the lease at the eleventh hour in March. Callum and the freeholder eventually agreed on a premium of £5,500 . If he had missed the deadline, the premium would have escalated by a minimum £925.
In 2014 we were approached by Dr Harrison Davies who, having acquired a basement flat in Hornsea in November 1996. We are asked if we could shed any light on how much (roughly) price would likely be for a ninety year lease extension. Comparative homes in Hornsea with a long lease were valued around £242,600. The average ground rent payable was £45 billed monthly. The lease ended on 2 June 2093. Having 67 years left we approximated the compensation to the freeholder to extend the lease to be within £11,400 and £13,200 plus fees.
In 2014 we were approached by Mr Jasper Ward who, having owned a garden apartment in Hornsea in November 1997. The question was if we could approximate the price would likely be for a ninety year extension to my lease. Similar properties in Hornsea with a long lease were in the region of £280,000. The average amount of ground rent was £55 collected per annum. The lease terminated on 7 July 2104. Given that there were 78 years unexpired we approximated the premium to the freeholder to extend the lease to be between £13,300 and £15,400 plus costs.