Lake District residential property held on a long lease is a depreciating asset because a leaseholder merely owns the property for a period of years.
It is generally considered that a residential leasehold with in excess of 100 years remaining is worth approximately the same as a freehold. Where an additional 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years in the future.
| 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. |
| 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. |
| Godiva Mortgages | A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. |
| 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
The conveyancing solicitors that we work with undertake Lake District 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.
Last October Kyle, came critically close to the eighty-year mark with the lease on his two bedroom flat in Lake District. Having purchased his home two decades ago, the lease term was of minimal importance. by good luck, it dawned on him that he needed to take action soon on a lease extension. Kyle extended the lease just under the wire last May. Kyle and the freeholder via the management company subsequently agreed on an amount of £5,500 . If the lease had slipped lower than eighty years, the sum would have become more exhorbitant by at least £1,125.
In 2014 we were contacted by Dr Megan Patel who, having acquired a studio flat in Lake District in January 2010. The question was if we could approximate the premium could be for a ninety year lease extension. Comparative premises in Lake District with a long lease were worth £300,000. The average amount of ground rent was £50 invoiced annually. The lease concluded on 27 April 2101. Taking into account 76 years left we calculated the compensation to the freeholder to extend the lease to be between £8,600 and £9,800 plus professional charges.
Last Spring we were contacted by Ms Yasmin Hernández , who purchased a purpose-built apartment in Lake District in May 2006. The question was if we could shed any light on how much (roughly) compensation to the landlord would be to prolong the lease by 90 years. Identical premises in Lake District with a long lease were in the region of £257,800. The mid-range amount of ground rent was £65 invoiced annually. The lease expired on 11 January 2090. Given that there were 65 years outstanding we calculated the premium to the freeholder to extend the lease to be within £18,100 and £20,800 plus fees.