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Why you should start your Kirkby Lonsdale lease extension


Why you should start your Kirkby Lonsdale lease extension today:

A Kirkby Lonsdale lease depreciates with the years remaining on the lease.

There is no doubt about it a leasehold property in Kirkby Lonsdale is a wasting asset as a result of the diminishing lease term. Where the residual term has, in excess of 100 years remaining then this decrease may be negligible that being said there will become a stage when a lease has less than 80 years left as part of the premium you will incur is what is termed as a marriage value. This could increase markedly the cost. It is the main logic behind why you should consider extending without delay. Many flat owners in Kirkby Lonsdale will meet the qualifying criteria; that being said a conveyancer can confirm whether you qualify for a lease extension. In certain situations you may not qualify, the most common reason being that you have owned the property for under two years.

Kirkby Lonsdale property with a lease extension is almost the same value as a freehold

It is generally considered 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 all but the shortest lease, the property will be equivalent in value to a freehold for many years ahead.

Mortgage lenders will not grant a mortgage on a short lease

Mortgage lenders are less likely to grant a loan offer on a domestic property in Kirkby Lonsdale with a short lease. Some lenders simply refuse to lend on leases with less than 75 years left.

Lender Requirement
Halifax Minimum 70 years from the date of the mortgage.
Leeds Building Society 85 years remaining from the start of the mortgage.
Nationwide Building Society - Our minimum unexpired lease term is 55 years, except where lending is over 85% of the purchase price/valuation on a second hand flat, in which case our minimum unexpired term is 90 years.
- There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start).

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
- Where lending is over 85% of the purchase price/valuation on a second hand flat and the unexpired lease term on the offer is 90 years or more - only advise us if the actual lease term is less than 90 years.

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 Issuing Office (Will be declined):
- Unexpired lease term less than 55 years
- Unexpired lease term less than 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat
- 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 is less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 55 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 1% 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 Issuing Office):
- Unexpired lease term greater than 85 years (Minimum 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat)
- 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 Issuing Office (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 (does not apply to Shared Ownership)
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- 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 1% 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 Issuing Office):
- 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
- A lease subject to a peppercorn Ground Rent (Annual Rent) charges

For the avoidance of doubt, any New Build properties completed but not sold pre-30 June 2022 will only be acceptable if the Lease conforms to the above guidance.

* 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.

Lease Extensions

We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to Issuing Office.
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.
TSB Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.

What makes us experts in Kirkby Lonsdale lease extensions?

Engaging our service gives you enhanced control over the value of your Kirkby Lonsdale leasehold, as your property will be more valuable and marketable in relation to the 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.

Kirkby Lonsdale Lease Extension Case Summaries:

Leo, Kirkby Lonsdale, Cumbria

Twenty four months ago Leo, started to get close to the eighty-year mark with the lease on his first floor flat in Kirkby Lonsdale. Having bought his property two decades ago, the lease term was of no significance. Thankfully, it dawned on him that he needed to take action soon on a lease extension. Leo was able to extend his lease at the eleventh hour last July. Leo and the freeholder ultimately agreed on an amount of £5,000 . If the lease had descended to less than 80 years, the amount would have escalated by a minimum £900.

Kirkby Lonsdale case:

Last year we were e-mailed by Mr Andrew James , who took over the lease of a ground floor apartment in Kirkby Lonsdale in June 2008. We are asked if we could shed any light on how much (roughly) premium could be for a ninety year lease extension. Similar premises in Kirkby Lonsdale with 100 year plus lease were in the region of £176,200. The mid-range amount of ground rent was £65 billed annually. The lease ended on 10 February 2080. Considering the 56 years as a residual term we calculated the premium to the freeholder for the lease extension to be between £29,500 and £34,000 exclusive of costs.

Kirkby Lonsdale case:

In 2009 we were e-mailed by Ms Melissa Green who, having took over the lease of a ground floor apartment in Kirkby Lonsdale in January 1995. The dilemma was if we could approximate the price could be for a 90 year lease extension. Identical residencies in Kirkby Lonsdale with an extended lease were in the region of £242,600. The average ground rent payable was £45 collected per annum. The lease expiry date was in 2091. Taking into account 67 years outstanding we estimated the premium to the freeholder to extend the lease to be within £11,400 and £13,200 exclusive of expenses.