The market value of Marchington leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of extending the lease can escalate substantially once the unexpired lease term is less than 80 years
It is conventional wisdom that a residential leasehold with in excess of one hundred years unexpired lease term is worth roughly the same as a freehold. Where an further ninety years added to any lease with more than 30 years left, the residence will be equivalent in value to a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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. |
The conveyancers that we work with handle Marchington 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 conveyancer we work with provide it.
Subsequent to protracted discussions with the freeholder of her purpose-built apartment in Marchington, Abigail initiated the lease extension process as the eighty year deadline was fast nearing. The transaction completed in July 2010. The freeholder’s charges were restricted to less than 500 GBP.
In 2012 we were e-mailed by Dr Daniel Mason who, having bought a garden apartment in Marchington in May 2000. The dilemma was if we could shed any light on how much (approximately) premium would likely be for a 90 year lease extension. Similar flats in Marchington with an extended lease were valued around £230,800. The mid-range ground rent payable was £60 invoiced quarterly. The lease terminated in 2085. Having 60 years unexpired we approximated the premium to the landlord to extend the lease to be within £24,700 and £28,600 not including fees.
Last month we were phoned by Dr Sam Pérez , who moved into a garden apartment in Marchington in August 2004. We are asked if we could shed any light on how much (approximately) premium would be to extend the lease by a further 90 years. Similar properties in Marchington with a long lease were worth £210,000. The mid-range amount of ground rent was £50 collected annually. The lease expiry date was in 2105. Given that there were 80 years unexpired we calculated the compensation to the landlord for the lease extension to be between £8,600 and £9,800 exclusive of expenses.