Lancaster leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease gets more expensive. Legislation has been in place for sometime now allowing qualifying Lancaster residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Lancaster you would be well advised to investigate if your lease has between seventy and ninety years remaining. In particular once the remaining lease term slips under 80 years, the amount payable for any lease extension sharply increases as an element of the premium you pay is what is known as a marriage value
It is conventional wisdom that a property with more than one hundred years remaining is worth roughly the same as a freehold. Where an further 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| 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 |
Regardless of whether you are a tenant or a landlord in Lancaster,the lease extension solicitors that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Lancaster valuers.
Gabriel owned a conversion flat in Lancaster being marketed with a lease of just over fifty eight years outstanding. Gabriel informally contacted his landlord being a well known Manchester-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to grant an extension taking the lease to 125 years subject to a rise in the rent to £200 annually. Ordinarily, ground rent would not be due on a lease extension were Gabriel to invoke his statutory right. Gabriel procured expert legal guidance and secured satisfactory deal without going to tribunal and readily saleable.
Last year we were called by Dr T Fournier , who purchased a garden apartment in Lancaster in June 2000. The dilemma was if we could estimate the price would be for a ninety year extension to my lease. Similar flats in Lancaster with an extended lease were worth £171,800. The mid-range amount of ground rent was £55 invoiced yearly. The lease termination date was in 2075. Given that there were 50 years outstanding we calculated the premium to the landlord for the lease extension to be within £33,300 and £38,400 plus professional charges.
In 2013 we were phoned by Dr M Bertrand who, having completed a basement apartment in Lancaster in January 1995. The dilemma was if we could estimate the price would be to extend the lease by ninety years. Comparative homes in Lancaster with 100 year plus lease were worth £280,000. The average amount of ground rent was £45 collected monthly. The lease concluded in 2095. Having 70 years unexpired we calculated the premium to the freeholder for the lease extension to be within £12,400 and £14,200 exclusive of legals.