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Top reasons for Littleport lease extension


Top reasons for lease extension now:

Increase your lease and increase your Littleport property value

Owning a apartment usually means owning a lease of the property, which has a set term of years. The lease will normally be granted for a set period of time , ordinarily 99 or 125 years, although we have witnessed longer and shorter terms in Littleport. Inevitably, the period of lease remaining shortens as time goes by. This may pass by relatively unnoticed when the property needs to be disposed of or re-mortgaged. The fewer the years remaining the lower the value of the property and the more expensive it will be to extend the lease. Qualifying leaseholders in Littleport have the right to extend the lease for a further ninety years under statute. You should give careful attention before delaying your Littleport lease extension. Holding off that expense now simply increases the price you will ultimately have to pay to extend your lease

An extended lease is almost the same value as a freehold

Leasehold properties in Littleport with in excess of 100 years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such circumstances there is often little to be gained by buying the freehold unless savings on ground rent and maintenance charges justify it.

Banks and Building Societies will not loan monies on a short lease

Lenders are really clamping down as regards to homes in Littleport with short leases. For instance you might discover that their lending requirements are stricter and that they adjust interest rates depending on how many years are left on the lease. Some may even refrain from lending completely, so where you needed to sell, your only options would be to find a cash buyer, or try your luck at auction thus restricting the amount of prospective purchasers.

Lender Requirement
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.
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.
Leeds Building Society 85 years remaing from the start of the mortgage.
Nationwide Building Society - Our minimum unexpired lease term is 55 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

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
- 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 0.5% 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 (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 0.5% 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.

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

Retaining our service will provide you better control over the value of your Littleport leasehold, as your property will be more valuable and saleable in relation to the lease length should you want to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.

Littleport Lease Extension Example Cases:

Evan, Littleport, Cambridgeshire,

Evan owned a 2 bedroom flat in Littleport being sold with a lease of a little over fifty eight years unexpired. Evan informally approached his landlord being a well known London-based freehold company for a lease extension. The landlord was keen to grant an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £125 yearly. No ground rent would be payable on a lease extension were Evan to invoke his statutory right. Evan procured expert legal guidance and was able to make an informed decision and deal with the matter and readily saleable.

Littleport case:

Mr C Roux moved into a one bedroom flat in Littleport in October 2011. The dilemma was if we could estimate the compensation to the landlord would be to prolong the lease by an additional years. Comparative properties in Littleport with 100 year plus lease were in the region of £200,000. The average ground rent payable was £50 collected per annum. The lease terminated in 2099. Considering the 77 years unexpired we estimated the compensation to the freeholder to extend the lease to be between £8,600 and £9,800 not including professional charges.

Littleport case:

Dr Natasha Morel completed a purpose-built apartment in Littleport in September 2001. The question was if we could estimate the premium would be for a 90 year lease extension. Similar properties in Littleport with an extended lease were in the region of £265,200. The mid-range ground rent payable was £65 collected annually. The lease termination date was in 2088. Considering the 66 years unexpired we approximated the premium to the freeholder for the lease extension to be within £15,200 and £17,600 plus fees.