For anyone whose Hotwells property is held on a long lease, our message is clear – if you ignore the situation, your property will eventually revert to the freeholder, leaving you empty-handed. The shorter the lease the lower the value of the property and the more it will cost to obtain a lease extension.
It is generally considered that a residential leasehold with over one hundred years unexpired lease term is worth roughly the same as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| 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. |
| Halifax | Minimum 70 years from the date 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. |
| 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 conveyancing solicitors that we work with procure Hotwells 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 lawyer we work with provide it.
Jayden was the the leasehold proprietor of a high value flat in Hotwells being marketed with a lease of fraction over sixty years unexpired. Jayden informally spoke with his freeholder a well known Bristol-based freehold company and enquired on a premium to extend the lease. The freeholder was prepared to grant an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £50 yearly. No ground rent would be payable on a lease extension were Jayden to invoke his statutory right. Jayden obtained expert advice and was able to make a more informed decision and handle with the matter and readily saleable.
Mr and Mrs. W Lewis owned a studio flat in Hotwells in April 2004. The question was if we could estimate the price would be for a ninety year extension to my lease. Comparative flats in Hotwells with a long lease were worth £181,600. The average amount of ground rent was £55 invoiced every twelve months. The lease concluded in 2077. Having 52 years remaining we calculated the compensation to the landlord to extend the lease to be within £30,400 and £35,200 not including professional charges.
Mr and Mrs. T Pérez purchased a basement apartment in Hotwells in March 2005. We are asked if we could approximate the compensation to the landlord would likely be to extend the lease by a further 90 years. Comparable homes in Hotwells with an extended lease were valued about £285,000. The average ground rent payable was £45 billed annually. The lease came to a finish in 2097. Considering the 72 years as a residual term we estimated the premium to the landlord to extend the lease to be between £12,400 and £14,200 plus fees.