Unfortunately that a Letchworth Garden City residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the reduction being disguised by increases in the Letchworth Garden City property market.Where your lease has approximately 90 years left, you should start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease falls below 80 years - otherwise a higher premium will be due. The majority of flat owners in Letchworth Garden City will be able to extend under the legislation; however a lawyer will be able to clarify if you are eligibility. In some situations you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process is initiated and you will need to be guided by your conveyancing solicitor throughout the formalities.
Leasehold residencies in Letchworth Garden City with in excess of 100 years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and maintenance charges merit it.
| 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. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
| Nationwide Building Society | - Our minimum unexpired lease term is 55 years, except where lending is over 85% of the purchase price/valuation on a second hand flat, in which case our minimum unexpired term is 90 years. - There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start). 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 - Where lending is over 85% of the purchase price/valuation on a second hand flat and the unexpired lease term on the offer is 90 years or more - only advise us if the actual lease term is less than 90 years. 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 55 years - Unexpired lease term less than 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat - 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 is 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 55 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% 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 (Minimum 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat) - 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 (does not apply to Shared Ownership) - 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 charged which is more than on a peppercorn basis 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% 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 Issuing Office. Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning. |
Irrespective of whether you are a tenant or a landlord in Letchworth Garden City,the lease extension solicitors that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Letchworth Garden City valuers.
In 2014 Jonathan, started to get near to the eighty-year mark with the lease on his basement apartment in Letchworth Garden City. In buying his flat 18 years ago, the length of the lease was of no bearing. Thankfully, he realised he needed to take steps soon on Extending the lease. Jonathan was able to extend his lease just in the nick of time in March. Jonathan and the landlord subsequently settled on the final figure of £6,000 . If the lease had slipped lower than 80 years, the sum would have gone up by a minimum £1,100.
Dr M Wood purchased a garden apartment in Letchworth Garden City in July 2006. The dilemma was if we could estimate the premium would be for a ninety year extension to my lease. Comparative premises in Letchworth Garden City with 100 year plus lease were worth £245,000. The average ground rent payable was £50 invoiced yearly. The lease concluded in 2094. Taking into account 68 years as a residual term we estimated the premium to the landlord to extend the lease to be within £9,500 and £11,000 exclusive of costs.
In 2012 we were contacted by Mr and Mrs. J Morgan who, having moved into a newly refurbished apartment in Letchworth Garden City in May 1998. We are asked if we could estimate the compensation to the landlord could be to extend the lease by ninety years. Identical residencies in Letchworth Garden City with a long lease were worth £285,000. The average ground rent payable was £55 billed every twelve months. The lease elapsed on 12 June 2105. Having 79 years as a residual term we approximated the premium to the landlord for the lease extension to be within £13,300 and £15,400 not including professional charges.