It’s an underpublicised truth that a Luton residential lease is a deteriorating asset. As the lease term reduces so does the value of the property. The extent of this is taken for granted in the first few years due to the depreciation being disguised by increases in the Luton property market.Once your lease nears 85ish years, you need to start considering 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 slips lower than 80 years - otherwise a higher premium will be due. The majority of flat owners in Luton will be able to extend under the legislation; however a lawyer should be able to confirm if you qualify for an extension. In some situations you may not qualify. 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 lawyer for the duration of the formalities.
It is generally considered that a property with in excess of 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancing solicitors that we work with undertake Luton lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The lawyer we work with provide it.
Two years ago Aiden, came very close to the 80-year mark with the lease on his basement apartment in Luton. In buying his flat twenty years previously, the unexpired term was of no importance. Luckily, he realised he needed to take action soon on a lease extension. Aiden arranged for a lease extension just under the wire in March. Aiden and the freeholder via the managing agents eventually settled on a premium of £5,000 . If he not met the deadline, the premium would have escalated by at least £1,100.
Dr Isabelle Brooks acquired a one bedroom flat in Luton in June 2004. We are asked if we could shed any light on how much (roughly) price could be for a ninety year extension to my lease. Similar homes in Luton with a long lease were worth £245,000. The average ground rent payable was £45 collected annually. The lease concluded in 2094. Considering the 68 years as a residual term we approximated the premium to the landlord for the lease extension to be between £9,500 and £11,000 exclusive of legals.
Dr Lily Alexander was assigned a lease of a purpose-built apartment in Luton in November 2012. The dilemma was if we could estimate the compensation to the landlord would be for a ninety year extension to my lease. Comparative flats in Luton with 100 year plus lease were in the region of £280,000. The average ground rent payable was £55 billed per annum. The lease ran out on 18 February 2105. Considering the 79 years remaining we estimated the premium to the landlord for the lease extension to be within £13,300 and £15,400 plus fees.