The market value of a leasehold property in Ilminster is impacted by how long the lease has remaining. If it is near to or less than 80 years you should foresee problems on re-sale, so it is recommended to arrange for the lease to be extended prior to buying. It is preferable to start the process of extending the lease is when the lease still has 82 years unexpired so that formalities can be concluded in advance of the 80 year mark. Current legislation enables Ilminster qualifying lessees to obtain a lease extension of ninety years on top of the remaining lease term at a peppercorn rent (that is, rent free). The purpose of the valuation is to arrive at an opinion of the premium payable by the lessee to the freeholder for the purchase of the lease extension.
It is generally accepted that a residential leasehold with over one hundred years remaining is worth roughly the equivalent as a freehold. Where an additional 90 years added to any lease with more than 30 years remaining, the property will be worth the same as a freehold for many years ahead.
| 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; |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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 |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The lawyers that we work with handle Ilminster 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 conveyancing solicitor we work with provide it.
Off the back of protracted discussions with the freeholder of her purpose-built flat in Ilminster, Rosie commenced the lease extension process just as the lease was nearing the critical eighty-year deadline. The legal work was concluded in November 2015. The freeholder’s costs were kept to an absolute minimum.
Last June we were approach by Dr O Bonnet , who owned a purpose-built apartment in Ilminster in June 2001. The question was if we could estimate the price would likely be for a 90 year lease extension. Comparable properties in Ilminster with an extended lease were worth £300,000. The average ground rent payable was £50 collected yearly. The lease terminated on 9 May 2101. Given that there were 76 years left we estimated the premium to the landlord to extend the lease to be between £8,600 and £9,800 not including fees.
Mrs Daisy Sharif moved into a one bedroom apartment in Ilminster in January 1998. The dilemma was if we could approximate the compensation to the landlord could be for a ninety year extension to my lease. Comparative homes in Ilminster with 100 year plus lease were valued about £257,800. The average amount of ground rent was £65 billed annually. The lease terminated in 2090. Taking into account 65 years left we estimated the premium to the freeholder to extend the lease to be within £18,100 and £20,800 plus legals.