There is no doubt about it a leasehold flat or house in March is a wasting asset as a result of the diminishing lease term. Where the residual term has, in excess of 100 years to run then this decrease may be fractional nevertheless there will become a point in time when a lease has fewer than 80 years left as part of the premium you will incur is what is known as a marriage value. This could be significant. It is the main reason why you should extend the lease without delay. Most flat owners in March will meet the qualifying criteria; that being said a conveyancer can advise whether you qualify to extend your lease. In certain situations you may not qualify, the most common reason being that you have not been the owner of the property for two years.
Leasehold premises in March with over one hundred 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 home. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and estate charges justify it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset 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 freeholder in March,the lease extension experts that we work with will always be happy 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.
Half a year ago Jason, came very close to the 80-year mark with the lease on his purpose- built flat in March. In buying his property two decades ago, the unexpired term was of no importance. As luck would have it, he became aware that he would soon be paying an inflated amount for a lease extension. Jason arranged for a lease extension just under the wire in January. Jason and the freeholder via the managing agents ultimately agreed on sum of £5,500 . If the lease had slipped to less than eighty years, the figure would have gone up by a minimum £925.
Mr and Mrs. R Nelson was assigned a lease of a one bedroom flat in March in June 2012. We are asked if we could approximate the premium would likely be for a ninety year extension to my lease. Similar premises in March with a long lease were worth £191,400. The average ground rent payable was £55 collected every twelve months. The lease ran out on 2 February 2080. Considering the 54 years remaining we estimated the premium to the freeholder for the lease extension to be between £34,200 and £39,600 plus costs.
In 2009 we were approached by Mr and Mrs. G Richardson who, having purchased a garden flat in March in August 2008. We are asked if we could estimate the premium would be to prolong the lease by an additional years. Comparable properties in March with an extended lease were in the region of £295,000. The average amount of ground rent was £45 collected yearly. The lease end date was on 13 April 2100. Having 74 years unexpired we approximated the compensation to the landlord for the lease extension to be within £8,600 and £9,800 plus expenses.