The value of Meir leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of a lease extension can increase materialy once the remaining term is below than eighty years
It is conventional wisdom that a property with in excess of one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional ninety years added to any lease with more than 45 years left, the property will be equivalent in value to a freehold for many years in the future.
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Halifax | Minimum 70 years from the date 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 |
| 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. |
The conveyancing solicitors that we work with undertake Meir 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.
Two years ago Finley, came perilously close to the eighty-year threshold with the lease on his first floor apartment in Meir. In buying his flat twenty years previously, the length of the lease was of minimal interest. Fortunately, he noticed he needed to take steps soon on a lease extension. Finley arranged for a lease extension at the eleventh hour last January. Finley and the freeholder in the end settled on the final figure of £5,000 . If he had missed the deadline, the figure would have become more costly by a minimum £1,025.
In 2012 we were contacted by Dr Abbie Mercier who, having took over the lease of a first floor apartment in Meir in June 2009. The question was if we could estimate the compensation to the landlord would likely be to extend the lease by ninety years. Similar residencies in Meir with an extended lease were valued around £183,600. The mid-range ground rent payable was £65 invoiced every twelve months. The lease concluded on 25 April 2083. Having 57 years as a residual term we calculated the compensation to the landlord for the lease extension to be between £28,500 and £33,000 plus fees.
Mr F Green took over the lease of a first floor apartment in Meir in June 2005. The dilemma was if we could approximate the compensation to the landlord could be for a ninety year lease extension. Comparative flats in Meir with a long lease were worth £250,000. The mid-range ground rent payable was £50 collected monthly. The lease ran out on 16 June 2094. Having 68 years outstanding we approximated the compensation to the freeholder to extend the lease to be within £10,500 and £12,000 exclusive of fees.