Ingatestone Lease Extension - Free Consultation

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Why you should start your Ingatestone lease extension


Why you should commence your Ingatestone lease extension today:

A Ingatestone leasehold property depreciates with the years remaining on the lease.

When it comes to domestic leasehold property in Ingatestone, you are in fact renting it for a certain amount of time. Modern flat leases typically tend to be for 99 years or 125. Even though this may appear like a long period of time, you may think about extending the lease sooner as opposed to later. The general rule is that the shorter the number of years is the cost of extending the lease gets disproportionately more expensive particularly once there are fewer than 80 years remaining. Anyone in Ingatestone with a lease approaching 81 years unexpired should seriously think of extending it sooner rather than later. When the lease term has below 80 years left, under the current legislation the freeholder can calculate and demand a greater amount, based on a technical computation, known as “marriage value” which is payable.

An extended lease has roughly the same value as a freehold

It is conventional wisdom that a residential leasehold with in excess of 100 years unexpired lease term is worth approximately the same as a freehold. Where an further ninety years added to any lease with more than 35 years unexpired, the residence will be worth the same as a freehold for many years in the future.

Mortgage lenders may not issue a mortgage with a short lease

Most banks and building societies insist on a lengthy amount of time remaining on a leasehold property before they will consider it as adequate security. Even if you don't need a mortgage, you should be mindful that it is probable that someone wanting to buy your property in the future might well do, so in the event that they are not able to obtain a mortgage, then the value of your property will likely suffer. Since 2008 most banks and building societies have increased the required minimum lease length that they are prepared to lend on

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.
Leeds Building Society 85 years remaing from the start 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.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to 5 years
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- Starting Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than 5 years
- Ground Rent escalation less than or equal to RPI

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years
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.

What makes us experts in Ingatestone lease extensions?

Retaining our service gives you increased control over the value of your Ingatestone leasehold, as your property will be more valuable and marketable in respect of lease length should you decide to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.

Ingatestone Lease Extension Case Studies:

Finn, Ingatestone, Essex

In 2014 Finn, started to get close to the 80-year threshold with the lease on his basement flat in Ingatestone. Having bought his property two decades ago, the lease term was of little interest. by good luck, it dawned on him that he needed to take steps soon on Extending the lease. Finn was able to extend his lease just ahead of time in August. Finn and the freeholder via the management company eventually settled on the final figure of £5,500 . If he not met the deadline, the premium would have increased by at least £925.

Ingatestone case:

Last year we were approach by Dr Y Fournier , who completed a one bedroom flat in Ingatestone in November 1997. The dilemma was if we could estimate the compensation to the landlord could be to extend the lease by 90 years. Identical residencies in Ingatestone with an extended lease were in the region of £183,600. The mid-range ground rent payable was £65 collected yearly. The lease concluded in 2079. Considering the 57 years remaining we calculated the compensation to the freeholder for the lease extension to be within £28,500 and £33,000 exclusive of costs.

Ingatestone case:

Last month we were phoned by Mr and Mrs. D Díaz , who purchased a one bedroom flat in Ingatestone in May 1998. The question was if we could approximate the compensation to the landlord would be to extend the lease by an additional years. Comparative residencies in Ingatestone with a long lease were worth £245,000. The average amount of ground rent was £50 billed every twelve months. The lease concluded in 2090. Given that there were 68 years unexpired we approximated the premium to the freeholder to extend the lease to be within £9,500 and £11,000 exclusive of legals.