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Top reasons for Ladywood lease extension


Why you should start your Ladywood lease extension today:

Increase your lease and increase your Ladywood property value

Ladywood leases on residential deteriorating in value. if your lease has about ninety years remaining, you should start considering the need for a lease extension. Eighty years is a significant number: when the remaining term of a lease dips below this level then you begin paying an additional element called marriage value. Flat owners in Ladywood will usually qualify for a lease extension; however it’s a good idea to check with a conveyancing solicitor to confirm if you qualify. In certain situations you may not be entitled. There are also strict deadlines and steps to comply with once the process has started so it’s wise to be guided by a conveyancer during the process.

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

Leasehold residencies in Ladywood with over 100 years unexpired on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and maintenance charges warrant it.

Lending institutions may decide not to lend on a short lease

Mortgage companies are making their criteria more stringent and many now require flats to have at least sixty if not seventy years left once the mortgage has expired. As many flats in Ladywood were created in the 1950s, 1960s and 1970s this means many now require lease extensions if they wish to get a mortgage.

Lender Requirement
Bank of Scotland Minimum 70 years from the date of the mortgage.
Barnsley Building Society 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term.
Halifax Minimum 70 years from the date of the mortgage.
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 Issuing Office (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 Issuing Office (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 1.0% 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
- 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
- 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 reviewed and altered on any review basis or methodology

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 1.0% 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 the Issuing Office
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.

Why use us for your lease extension in Ladywood?

Lease extensions in Ladywood can be a difficult process. We recommend you procure guidance from a lawyer and valuer with experience in lease extensions.

We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge dealing with Ladywood lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.

Ladywood Lease Extension Case Studies:

Bethan, Ladywood, Birmingham,

Subsequent to protracted correspondence with the landlord of her first floor flat in Ladywood, Bethan started the lease extension process as the 80 year deadline was rapidly approaching. The legal work was concluded in January 2005. The landlord’s costs were restricted to a tad over 500 pounds.

Ladywood case:

In 2011 we were e-mailed by Dr Leah King who, having completed a recently refurbished apartment in Ladywood in September 2001. The dilemma was if we could approximate the premium would be to extend the lease by a further 90 years. Comparable homes in Ladywood with 100 year plus lease were worth £265,000. The mid-range amount of ground rent was £55 invoiced every twelve months. The lease concluded in 2098. Taking into account 74 years remaining we calculated the premium to the landlord to extend the lease to be within £9,500 and £11,000 not including professional charges.

Ladywood case:

Last Christmas we were called by Mrs O López , who took over the lease of a garden apartment in Ladywood in April 1999. We are asked if we could estimate the premium would likely be for a ninety year lease extension. Similar flats in Ladywood with an extended lease were valued around £166,400. The mid-range ground rent payable was £60 collected yearly. The lease ended in 2078. Given that there were 54 years remaining we calculated the compensation to the freeholder to extend the lease to be between £32,300 and £37,400 not including fees.