The market value of a leasehold property in Horwich depends on how long the lease has remaining. If it is close to or less than 80 years you should foresee problems on re-sale, so it is recommended to arrange for a lease extension ahead of purchasing. Ideally one should start the process of extending the lease is when a lease still has 82 years remaining so that all matters can be finalised prior to the 80 year threshold. Statute enables Horwich qualifying lessees to acquire a lease extension of ninety years in addition to the remaining length of the lease at a peppercorn rent (that is, rent free). The reason of the valuation is to determine the sum payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold residencies in Horwich with over 100 years unexpired 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 situations there is often little upside in purchasing the freehold unless savings on ground rent and estate charges justify it.
| 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; |
| 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 also be not less than 75 years at the outset of the mortgage. |
| 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. |
The conveyancers that we work with handle Horwich 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.
Finn was the the leasehold owner of a 2 bedroom flat in Horwich being sold with a lease of a few days over 72 years unexpired. Finn on an informal basis approached his landlord being a well known Bristol-based freehold company for a lease extension. The freeholder indicated a willingness to grant an extension taking the lease to 125 years on the basis of a new rent to start with set at £100 per annum and increase every twenty five years thereafter. Ordinarily, ground rent would not be due on a lease extension were Finn to exercise his statutory right. Finn obtained expert advice and secured an acceptable deal informally and sell the flat.
Last Christmas we were phoned by Dr Logan Ramírez , who purchased a newly refurbished flat in Horwich in October 2010. We are asked if we could estimate the premium could be to extend the lease by a further 90 years. Identical homes in Horwich with 100 year plus lease were valued around £230,800. The average ground rent payable was £60 collected annually. The lease ran out in 2085. Taking into account 60 years outstanding we approximated the premium to the landlord to extend the lease to be within £24,700 and £28,600 exclusive of costs.
Mr and Mrs. H Sánchez bought a basement flat in Horwich in July 2011. We are asked if we could approximate the compensation to the landlord could be for a ninety year lease extension. Similar properties in Horwich with 100 year plus lease were valued about £210,000. The average amount of ground rent was £50 billed yearly. The lease ran out on 14 September 2105. Taking into account 80 years outstanding we estimated the premium to the landlord to extend the lease to be within £8,600 and £9,800 not including legals.