The market value of Llanelli leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of a lease extension can escalate substantially once the remaining term is below than 80 years
Leasehold premises in Llanelli with in excess of 100 years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and maintenance charges warrant it.
| Lender | Requirement |
|---|---|
| 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; |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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 |
Regardless of whether you are a tenant or a landlord in Llanelli,the lease extension lawyers that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Llanelli valuers.
In 2014 Elijah, came seriously close to the 80-year threshold with the lease on his garden apartment in Llanelli. Having bought his flat 19 years previously, the length of the lease was of no importance. Fortunately, he noticed he would soon be paying way over the odds for a lease extension. Elijah was able to extend his lease at the eleventh hour in May. Elijah and the freeholder via the managing agents eventually agreed on sum of £5,000 . If he failed to meet the deadline, the premium would have increased by a minimum £1,100.
Last Spring we were phoned by Dr E Rivera , who completed a ground floor flat in Llanelli in January 2012. The question was if we could estimate the premium would be for a 90 year extension to my lease. Identical flats in Llanelli with a long lease were in the region of £210,000. The average ground rent payable was £50 invoiced quarterly. The lease terminated in 2105. Having 80 years left we approximated the compensation to the landlord for the lease extension to be between £8,600 and £9,800 not including costs.
Last Summer we were phoned by Ms Emily Girard , who purchased a basement apartment in Llanelli in March 1996. The dilemma was if we could estimate the premium would be to extend the lease by 90 years. Identical premises in Llanelli with 100 year plus lease were valued around £275,000. The average ground rent payable was £45 collected annually. The lease concluded on 25 March 2094. Given that there were 69 years left we calculated the compensation to the freeholder for the lease extension to be within £12,400 and £14,200 plus professional charges.