Owning a apartment usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. The lease will usually be granted for a prescribed period of time , ordinarily 99 or 125 years, although we have seen longer and shorter terms in March. Clearly, the period of lease remaining shortens as time goes by. This is often ignored and only raises itself as an issue when the property has to be disposed of or refinanced. The fewer the years remaining the less it is worth and the more it will cost to extend the lease. Qualifying leaseholders in March have the right to extend the lease for an additional ninety years under legislation. Please give due attention before putting off your March lease extension. Holding off the cost now likely increases the price you will ultimately have to pay to extend your lease
Leasehold premises in March with more than one hundred years remaining on the lease are often referred to as ‘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 to be gained by purchasing the reversionary interest unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
| 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. |
| Yorkshire 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. |
Irrespective of whether you are a tenant or a freeholder in March,the lease extension lawyers that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with March valuers.
Two years ago Kai, started to get close to the 80-year mark with the lease on his studio apartment in March. In buying his property 18 years previously, the length of the lease was of no relevance. by good luck, he noticed he would imminently be paying way over the odds for Extending the lease. Kai arranged for a lease extension at the eleventh hour in July. Kai and the landlord who owned the flat above ultimately agreed on the final figure of £5,000 . If the lease had slipped below 80 years, the sum would have gone up by at least £1,025.
Last Spring we were called by Mrs Gemma Watson , who acquired a purpose-built flat in March in November 1998. The dilemma was if we could estimate the premium could be to prolong the lease by an additional years. Identical flats in March with an extended lease were in the region of £285,000. The average amount of ground rent was £45 billed annually. The lease expired on 23 April 2097. Having 72 years as a residual term we approximated the premium to the freeholder for the lease extension to be within £12,400 and £14,200 exclusive of professional charges.
Mrs Jodie Rose was assigned a lease of a ground floor apartment in March in April 2004. We are asked if we could approximate the premium would be to extend the lease by 90 years. Comparative premises in March with 100 year plus lease were in the region of £233,200. The mid-range amount of ground rent was £60 collected monthly. The lease ended in 2086. Considering the 61 years left we approximated the compensation to the landlord for the lease extension to be between £22,800 and £26,400 plus fees.