For those whose Ledbury home is held on a long lease, the message is clear – if nothing is done, your property will ultimately revert to the freeholder, leaving you empty-handed. The shorter the lease the less it is worth and the more expensive it will be to procure a lease extension.
It is conventional wisdom that a property with in excess of 100 years remaining is worth approximately the same as a freehold. Where an additional 90 years added to any lease with more than 30 years remaining, the residence will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| 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; |
| 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. |
| 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 |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Retaining our service gives you increased control over the value of your Ledbury leasehold, as your property will be more valuable and marketable in respect of lease length should you decide to sell. The conveyancing solicitors that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Harry was the the leasehold proprietor of a studio apartment in Ledbury on the market with a lease of a few days over 72 years left. Harry on an informal basis approached his freeholder a well known London-based freehold company and enquired on a premium to extend the lease. The freeholder was prepared to give an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent at the outset set at £150 per annum and doubled every 25 years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Harry to exercise his statutory right. Harry procured expert legal guidance and secured an acceptable resolution without resorting to tribunal and readily saleable.
Mr and Mrs. M Garcia was assigned a lease of a garden apartment in Ledbury in May 2000. The dilemma was if we could approximate the price would likely be for a 90 year lease extension. Identical homes in Ledbury with 100 year plus lease were valued around £235,600. The mid-range amount of ground rent was £60 invoiced every twelve months. The lease terminated in 2088. Having 62 years as a residual term we approximated the premium to the landlord for the lease extension to be between £21,900 and £25,200 not including legals.
Last May we were contacted by Mr and Mrs. L Brooks , who bought a recently refurbished flat in Ledbury in February 2005. We are asked if we could approximate the premium could be to prolong the lease by ninety years. Identical properties in Ledbury with a long lease were valued around £174,200. The average ground rent payable was £55 invoiced annually. The lease came to a finish in 2077. Given that there were 51 years left we calculated the premium to the landlord for the lease extension to be within £31,400 and £36,200 not including costs.