For those whose Langford property is held on a long lease, the message is clear – if no remedial action is taken, the property will eventually revert to the freeholder, leaving you empty-handed. The shorter the lease the less it is worth and the more it will cost to extend the lease.
It is conventional wisdom that a property with more than 100 years remaining is worth approximately the equivalent as a freehold. Where an additional 90 years added to any lease with more than 45 years unexpired, the premises will be worth the same as a freehold for many years ahead.
| 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. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Coventry Building Society | 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. |
| 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. |
| 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. |
The conveyancing solicitors that we work with handle Langford 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.
Ali owned a conversion apartment in Langford on the market with a lease of a little over sixty years outstanding. Ali on an informal basis approached his landlord being a well known Bristol-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 new rent to start with set at £150 per annum and increase every 25 years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Ali to invoke his statutory right. Ali obtained expert legal guidance and was able to make an informed judgement and handle with the matter and sell the flat.
In 2010 we were e-mailed by Dr Charlotte Lefèvre who, having moved into a basement apartment in Langford in November 1998. The dilemma was if we could approximate the compensation to the landlord would be to extend the lease by a further 90 years. Comparable homes in Langford with a long lease were valued about £208,200. The average amount of ground rent was £65 invoiced annually. The lease elapsed on 25 January 2087. Having 61 years unexpired we estimated the premium to the landlord to extend the lease to be within £20,000 and £23,000 plus costs.
Last Summer we were e-mailed by Mr and Mrs. E Watson , who purchased a one bedroom flat in Langford in June 1996. The question was if we could shed any light on how much (roughly) premium could be for a ninety year lease extension. Similar homes in Langford with 100 year plus lease were valued around £260,000. The average ground rent payable was £50 billed annually. The lease elapsed on 19 September 2098. Given that there were 72 years unexpired we approximated the compensation to the landlord to extend the lease to be within £9,500 and £11,000 plus legals.