Maryland leases on domestic properties are gradually losing value. Where your lease has about 90 years remaining, you should start thinking about a lease extension. If lease term is less than 80 years, you will then have to pay 50% of the property's 'marriage value' on top of the standard cost of the lease extension to your landlord. Marriage value is the amount of additional value that a lease extension will add to the property. Leasehold owners in Maryland will mostly be legally entitled to a lease extension; however a solicitor will check your eligibility. In certain situations you may not qualify. There are also strict timetables and steps to follow once the process has started so it’s prudent to be guided by a lawyer during the process.
It is generally accepted that a residential leasehold with over one hundred years remaining is worth approximately the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the property will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| 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. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Retaining our service gives you increased control over the value of your Maryland leasehold, as your property will be more valuable and saleable in terms of lease length should you decide to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Ibrahim was the the leasehold proprietor of a conversion flat in Maryland being marketed with a lease of just over sixty years outstanding. Ibrahim informally spoke with his landlord a well known Manchester-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to grant an extension taking the lease to 125 years subject to a new rent initially set at £200 per annum and doubled every twenty five years thereafter. No ground rent would be due on a lease extension were Ibrahim to exercise his statutory right. Ibrahim procured expert advice and was able to make a more informed decision and deal with the matter and sell the flat.
In 2009 we were approached by Dr J André who, having moved into a first floor flat in Maryland in September 1997. We are asked if we could shed any light on how much (roughly) compensation to the landlord could be to extend the lease by 90 years. Comparable homes in Maryland with 100 year plus lease were in the region of £181,600. The average ground rent payable was £55 billed yearly. The lease elapsed on 7 August 2078. Having 52 years as a residual term we calculated the premium to the landlord to extend the lease to be within £30,400 and £35,200 plus expenses.
An example of a Lease Extension case for a Maryland flat is 151A Ham Park Road in May 2010. The matter came before the Tribunal by way of a vesting order made on 12 June 2009 Deputy District Judge Coonan in Bow County Court. The tribunal decided that the sum payable for the m to be paid for the lease extension was £21,445 This case related to 1 flat.