It’s an underpublicised truth that a Idle residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the loss of value being disguised by increases in the Idle property prices.Once your lease gets to 85ish years, you need to start considering a lease extension. If lease term slips below eighty years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of extra value that a lease extension will add the property Most leasehold owners in Idle will be able to extend under the legislation; however a lawyer should be able to clarify if you are eligibility. In some situations you may not be entitled. There are also strict timeframes and procedures to follow once the process has commenced and you will need to be guided by your conveyancer for the duration of the process.
Leasehold residencies in Idle with more than 100 years outstanding on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and maintenance charges warrant it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| Lloyds TSB Scotland | 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. |
| 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 |
Irrespective of whether you are a tenant or a freeholder in Idle,the lease extension solicitors that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Idle valuers.
Dexter owned a studio apartment in Idle being marketed with a lease of a few days over 61 years outstanding. Dexter on an informal basis contacted his landlord being a well known Bristol-based freehold company for a lease extension. The freeholder was prepared to agree an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent initially set at £100 per annum and increase every 25 years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Dexter to invoke his statutory right. Dexter obtained expert advice and was able to make a more informed judgement and deal with the matter and readily saleable.
Last month we were e-mailed by Mr and Mrs. V Thomas , who completed a newly refurbished flat in Idle in November 1996. We are asked if we could shed any light on how much (approximately) price would likely be for a 90 year lease extension. Comparative premises in Idle with a long lease were valued about £200,800. The mid-range amount of ground rent was £65 invoiced every twelve months. The lease lapsed in 2085. Taking into account 60 years remaining we calculated the compensation to the freeholder for the lease extension to be within £20,900 and £24,200 plus professional charges.
In 2013 we were called by Dr Elijah Baker who, having completed a basement flat in Idle in November 2007. The question was if we could shed any light on how much (roughly) compensation to the landlord could be to extend the lease by a further 90 years. Identical premises in Idle with a long lease were worth £255,000. The mid-range ground rent payable was £50 invoiced annually. The lease concluded in 2096. Given that there were 71 years remaining we approximated the premium to the landlord for the lease extension to be between £9,500 and £11,000 not including legals.