It’s an underpublicised certainty that a Mersea Island residential lease is a deteriorating asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the early years due to the deflation being disguised by increases in the Mersea Island property market.Where your lease has approximately ninety years left, you need to start thinking about a lease extension. If the number of years remaining falls under eighty years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property The majority of leasehold owners in Mersea Island will be able to extend under the legislation; however a lawyer will be able to confirm whether you qualify for an extension. In some situations you may not qualify. There are also strict timeframes and procedures to be adhered to once the process is initiated and you will need to be guided by your conveyancing solicitor for the duration of the process.
It is conventional wisdom that a residential leasehold with more than one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the property will be worth the same as a freehold for many years ahead.
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Using our service will provide you enhanced control over the value of your Mersea Island leasehold, as your property will be more valuable and marketable in relation to the lease length should you want to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Last year Jack, started to get close to the 80-year threshold with the lease on his garden flat in Mersea Island. Having purchased his home two decades ago, the length of the lease was of little importance. Fortunately, he noticed he needed to take steps soon on Extending the lease. Jack arranged for a lease extension just under the wire last July. Jack and the freeholder via the managing agents ultimately agreed on a premium of £5,500 . If the lease had gone below 80 years, the premium would have gone up by at least £925.
Dr Jake Norbert moved into a studio flat in Mersea Island in November 2003. We are asked if we could estimate the premium would likely be for a ninety year extension to my lease. Comparable premises in Mersea Island with an extended lease were in the region of £285,000. The average amount of ground rent was £55 collected quarterly. The lease finished on 2 July 2104. Considering the 79 years unexpired we approximated the premium to the freeholder to extend the lease to be between £13,300 and £15,400 exclusive of legals.
In 2009 we were e-mailed by Mrs Rachel Flores who, having purchased a studio apartment in Mersea Island in May 2004. The question was if we could estimate the premium would likely be for a 90 year lease extension. Similar residencies in Mersea Island with a long lease were valued about £193,400. The mid-range amount of ground rent was £65 collected yearly. The lease terminated in 2084. Given that there were 59 years left we estimated the premium to the freeholder for the lease extension to be between £21,900 and £25,200 not including costs.