Machen residential property held on a long lease is a wasting asset as the leaseholder merely owns the property for a period of years.
Leasehold residencies in Machen with over 100 years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| 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 |
The conveyancers that we work with handle Machen 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 conveyancing solicitor we work with provide it.
Subsequent to lengthy correspondence with the freeholder of her studio flat in Machen, Isabella initiated the lease extension process as the 80 year mark was quickly nearing. The transaction was finalised in January 2012. The freeholder’s costs were kept to an absolute minimum.
In 2012 we were approached by Mrs Holly Bennett who, having was assigned a lease of a garden flat in Machen in February 1998. We are asked if we could approximate the premium would be for a ninety year extension to my lease. Similar premises in Machen with an extended lease were in the region of £233,200. The average ground rent payable was £60 billed annually. The lease ran out in 2087. Having 61 years outstanding we calculated the compensation to the freeholder for the lease extension to be within £22,800 and £26,400 not including legals.
Last Summer we were contacted by Mr W King , who took over the lease of a one bedroom flat in Machen in February 1998. We are asked if we could approximate the compensation to the landlord would likely be to extend the lease by an additional years. Identical homes in Machen with a long lease were worth £171,800. The mid-range ground rent payable was £55 collected quarterly. The lease end date was on 9 November 2076. Taking into account 50 years unexpired we calculated the compensation to the freeholder for the lease extension to be between £33,300 and £38,400 exclusive of fees.