As the length of the unexpired term of a Little Mill residential lease diminished so does its value and therefore the value of your property. Where the lease has, over 99 years remaining then this decrease may be negligible nevertheless there will become a point in time when a lease has less than 80 years remaining as part of the premium you will incur is what is termed as a marriage value. This could be significant. It is the main reason why you should extend the lease sooner than later. The majority of flat owners in Little Mill will meet the qualifying criteria; however a lawyer can advise whether you are eligible to extend your lease. In certain situations you may not qualify, the most frequent reason being that you have not been the owner of the property for two years.
It is generally accepted that a residential leasehold with more than 100 years unexpired lease term is worth approximately the same as a freehold. Where an additional ninety years added to all but the shortest lease, the residence 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. |
| 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; |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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 will provide you increased control over the value of your Little Mill leasehold, as your property will be more valuable and marketable in relation to the lease length should you want to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Two years ago Jake, came precariously near to the 80-year threshold with the lease on his ground floor flat in Little Mill. Having purchased his home 19 years previously, the lease term was of no relevance. Luckily, he recognised he would imminently be paying an inflated amount for a lease extension. Jake extended the lease at the eleventh hour in June. Jake and the freeholder in the end agreed on a premium of £5,000 . If he failed to meet the deadline, the sum would have increased by a minimum £1,150.
Last month we were contacted by Mr and Mrs. K Rodríguez , who bought a basement flat in Little Mill in March 2010. The dilemma was if we could shed any light on how much (roughly) premium could be for a ninety year lease extension. Comparable flats in Little Mill with a long lease were valued around £260,200. The mid-range ground rent payable was £65 invoiced annually. The lease ran out in 2091. Given that there were 66 years left we approximated the compensation to the freeholder for the lease extension to be between £16,200 and £18,600 exclusive of expenses.
In 2012 we were contacted by Ms Danielle Bertrand who, having moved into a newly refurbished flat in Little Mill in April 2003. The question was if we could estimate the premium could be for a 90 year lease extension. Comparable premises in Little Mill with 100 year plus lease were valued about £198,800. The mid-range amount of ground rent was £55 billed yearly. The lease terminated in 2080. Considering the 55 years remaining we calculated the premium to the freeholder to extend the lease to be between £33,300 and £38,400 not including professional charges.