The re-sale value of a leasehold property in Ilminster is impacted by how many years the lease has remaining. If it is close to or less than eighty years you should foresee problems on re-sale, so it is advisable to arrange for the lease to be extended prior to purchasing. It is ideal to start the process of extending the lease is when a lease still has 82 years remaining so that formalities can be finalised prior to the eighty year mark. Leasehold Reform legislation entitles Ilminster qualifying lessees to obtain a new lease which will be for the current unexpired lease term plus a supplemental term of ninety years. The intention of the valuation is to arrive at an opinion of the premium payable by the lessee to the freeholder for the acquisition of the lease extension.
It is conventional wisdom that a residential leasehold with more than 100 years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional ninety years added to any lease with more than 35 years unexpired, the property will be equivalent in value to a freehold for many years in the future.
| 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancers that we work with procure 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.
18 months ago Theo, started to get near to the eighty-year mark with the lease on his one bedroom apartment in Ilminster. In buying his property 18 years previously, the length of the lease was of minimal relevance. As luck would have it, he recognised he would soon be paying an inflated amount for Extending the lease. Theo arranged for a lease extension just under the wire last September. Theo and the landlord who owned the flat above ultimately settled on sum of £5,000 . If he failed to meet the deadline, the amount would have escalated by a minimum £900.
In 2011 we were phoned by Mr and Mrs. C Jackson who, having bought a basement apartment in Ilminster in October 2011. We are asked if we could estimate the price would likely be for a ninety year lease extension. Identical properties in Ilminster with a long lease were worth £198,800. The mid-range ground rent payable was £55 collected monthly. The lease ended in 2081. Given that there were 55 years as a residual term we approximated the premium to the landlord for the lease extension to be within £33,300 and £38,400 not including costs.
Mr and Mrs. E Moore purchased a garden apartment in Ilminster in March 2004. The dilemma was if we could shed any light on how much (roughly) premium could be for a ninety year extension to my lease. Comparative residencies in Ilminster with 100 year plus lease were valued around £300,000. The average ground rent payable was £50 billed yearly. The lease lapsed in 2101. Taking into account 75 years unexpired we calculated the compensation to the landlord to extend the lease to be within £9,500 and £11,000 exclusive of expenses.