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Main reasons to commence your Littleport lease extension


Top reasons for lease extension now:

A Littleport lease depreciates with the years remaining on the lease.

The rule of thumb is, all other things holding equal, the shorter the lease the more expensive the premium. Qualifying leaseholders in Littleport have the legal entitlement to extend the lease for a further ninety years in accordance with statute. Please give careful consideration before delaying your Littleport lease extension. Shelving the costs now simply escalates the amount you will eventually be required to pay for a lease extension.

Littleport property with a lease extension is almost the same value as a freehold

Leasehold premises in Littleport with over 100 years unexpired on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and service charges warrant it.

Lenders may not grant a mortgage on a short lease

Most mortgage lenders have tightened lending criteria in the last ten years and borrowers are encountering difficulties in arranging finance or re-mortgage against flats with shorter lease terms, particularly under 75 years as they are considered to be deficient security.

Lender Requirement
Bank of Scotland Minimum 70 years from the date of the mortgage.
Birmingham Midshires Minimum 70 years from the date of the mortgage.
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.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
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

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 70 years
- 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 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 70 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 1.0% 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
- 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
- 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 reviewed and altered on any review basis or methodology

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 1.0% 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 the Issuing Office
Virgin 85 years at the time of completion. If it's less, we require it to be extended on or before completion.

Get in touch with one of our Littleport lease extension solicitors or enfranchisement solicitors

Lease extensions in Littleport can be a difficult process. We recommend you get professional help from a lawyer and surveyor with experience in this area.

We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have a wealth of experience dealing with Littleport lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.

Littleport Lease Extension Example Cases:

Elijah, Littleport, Cambridgeshire,

Elijah was the the leasehold proprietor of a high value flat in Littleport being marketed with a lease of a little over 59 years unexpired. Elijah informally approached his landlord a well known London-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to grant an extension taking the lease to 125 years on the basis of a rise in the rent to £125 annually. No ground rent would be payable on a lease extension were Elijah to invoke his statutory right. Elijah obtained expert legal guidance and secured an acceptable resolution informally and ending up with a market value flat.

Littleport case:

Last Christmas we were phoned by Mrs W Nguyen , who acquired a garden apartment in Littleport in May 1995. The question was if we could approximate the premium could be for a 90 year extension to my lease. Similar premises in Littleport with 100 year plus lease were worth £179,200. The mid-range amount of ground rent was £55 collected per annum. The lease expired in 2075. Having 51 years remaining we approximated the premium to the freeholder for the lease extension to be within £31,400 and £36,200 not including expenses.

Littleport case:

In 2014 we were called by Mr and Mrs. V Nguyen who, having completed a basement apartment in Littleport in April 1997. We are asked if we could shed any light on how much (roughly) price could be for a ninety year lease extension. Comparable properties in Littleport with 100 year plus lease were in the region of £285,000. The mid-range ground rent payable was £45 collected monthly. The lease lapsed on 19 October 2096. Considering the 72 years outstanding we calculated the compensation to the freeholder to extend the lease to be within £12,400 and £14,200 plus fees.