It’s an underpublicised truth that a Johnstown 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 first few years due to the reduction being disguised by increases in the Johnstown property market.Once your lease nears 85ish years, you should start considering a lease extension. If lease term falls below eighty years, you will end up paying 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property Most leasehold owners in Johnstown will be able to extend under the legislation; however a conveyancing solicitor should be able to confirm if you are eligibility. In some cases you may not be entitled. There are also strict timetables and procedures to follow once the process is instigated and you will need to be guided by your lawyer from beginning to end of the formalities.
It is conventional wisdom that a residential leasehold with in excess of one hundred years remaining 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 decades to come.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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 procure Johnstown 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.
Two years ago Teddy, started to get near to the eighty-year threshold with the lease on his leasehold flat in Johnstown. Having bought his flat 18 years previously, the lease term was of little bearing. Luckily, he noticed he needed to take action soon on Extending the lease. Teddy extended the lease just ahead of time last April. Teddy and the landlord who owned the flat above eventually agreed on the final figure of £5,000 . If he had missed the deadline, the premium would have increased by at least £950.
In 2013 we were approached by Mr B Bell who, having acquired a studio apartment in Johnstown in March 2011. The dilemma was if we could approximate the price would likely be to extend the lease by an additional years. Comparable properties in Johnstown with an extended lease were in the region of £267,600. The average ground rent payable was £65 collected monthly. The lease terminated on 7 November 2093. Given that there were 67 years left we approximated the compensation to the freeholder for the lease extension to be within £14,300 and £16,400 plus professional charges.
In 2013 we were approached by Mrs O Torres who, having completed a one bedroom apartment in Johnstown in February 2001. We are asked if we could approximate the price would be for a 90 year lease extension. Similar flats in Johnstown with an extended lease were worth £206,200. The mid-range amount of ground rent was £55 invoiced annually. The lease ran out in 2082. Considering the 56 years outstanding we estimated the compensation to the landlord to extend the lease to be between £31,400 and £36,200 not including professional charges.