Owning a flat usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. your lease will usually be granted for a prescribed period of time , ordinarily 99 or 125 years, although we have witnessed longer and shorter terms in Mere. Clearly, the length of lease left reduces as time goes by. This is often overlooked and only raises itself as an issue when the residence needs to be disposed of or refinanced. The fewer the years remaining the lower the value of the property and the more it will cost to extend the lease. Qualifying leaseholders in Mere have the legal entitlement to extend the lease for a further 90 years in accordance with Leasehold Reform legislation. You should give careful attention before delaying your Mere lease extension. Putting off that expense now likely increases the price you will eventually incur to extend your lease
It is generally accepted that a property with over 100 years remaining is worth roughly the same as a freehold. Where an further 90 years added to any lease with more than 45 years unexpired, the premises will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Coventry Building Society | 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Irrespective of whether you are a tenant or a landlord in Mere,the lease extension solicitors that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Mere valuers.
Teddy was the the leasehold owner of a conversion flat in Mere on the market with a lease of a few days over sixty years remaining. Teddy on an informal basis contacted his freeholder being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The landlord was keen to grant an extension on non-statutory terms 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 Teddy to exercise his statutory right. Teddy obtained expert legal guidance and secured an acceptable resolution informally and ending up with a market value flat.
In 2009 we were phoned by Dr Harry Petit who, having bought a studio apartment in Mere in April 2004. The dilemma was if we could approximate the price could be for a ninety year lease extension. Comparable properties in Mere with 100 year plus lease were valued around £300,000. The average ground rent payable was £50 collected per annum. The lease ran out on 10 November 2101. Considering the 76 years remaining we estimated the compensation to the landlord to extend the lease to be between £8,600 and £9,800 exclusive of expenses.
In 2012 we were contacted by Dr L González who, having purchased a one bedroom flat in Mere in July 2006. We are asked if we could approximate the compensation to the landlord would be for a 90 year extension to my lease. Identical homes in Mere with 100 year plus lease were in the region of £257,800. The mid-range ground rent payable was £65 collected annually. The lease ran out in 2090. Given that there were 65 years as a residual term we estimated the compensation to the landlord for the lease extension to be between £18,100 and £20,800 not including legals.