The market value of Irchester leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of a lease extension can increase materialy once the unexpired lease term is less than eighty years
Leasehold properties in Irchester with over 100 years remaining on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| 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; |
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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 Irchester 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.
During the course of the last few months Muhammad, started to get close to the 80-year mark with the lease on his basement flat in Irchester. Having bought his property two decades ago, the lease term was of minimal significance. Thankfully, it dawned on him that he needed to take action soon on a lease extension. Muhammad extended the lease just under the wire last April. Muhammad and the landlord who owned the flat above ultimately agreed on a premium of £5,500 . If the lease had slid lower than 80 years, the price would have escalated by at least £975.
Last February we were approach by Mr William Baker , who purchased a one bedroom apartment in Irchester in November 2007. The dilemma was if we could shed any light on how much (approximately) price would likely be for a 90 year extension to my lease. Identical properties in Irchester with a long lease were worth £250,400. The average ground rent payable was £65 billed every twelve months. The lease elapsed in 2089. Considering the 64 years outstanding we calculated the compensation to the freeholder to extend the lease to be between £19,000 and £22,000 plus expenses.
Last year we were called by Dr Yasmin Williams , who was assigned a lease of a ground floor flat in Irchester in November 2003. We are asked if we could estimate the compensation to the landlord would likely be to extend the lease by an additional years. Comparable premises in Irchester with 100 year plus lease were worth £184,000. The average amount of ground rent was £55 collected yearly. The lease terminated in 2078. Taking into account 53 years left we approximated the premium to the freeholder for the lease extension to be within £28,500 and £33,000 plus professional charges.