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Why you should start your Mickleover lease extension


Top reasons for lease extension now:

Increase your lease and increase your Mickleover property value

Mickleover leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease gets more expensive. The majority of owners of residential leasehold property in Mickleover enjoy rights under legislation to extend the terms of their leases. If you are a leasehold owner in Mickleover you really ought to check if your lease has between 70 and 90 years remaining. There are good reasons why a Mickleover leaseholder with a lease having around 80 years remaining should take steps to ensure that a lease extension is put in place without delay

Mickleover property with a lease extension is almost the same value as a freehold

It is generally accepted that a property with more than one hundred years unexpired lease term is worth approximately the same as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be equivalent in value to a freehold for many years ahead.

Banks and Building Societies will not loan monies with a short lease

Many mortgage lenders require a lengthy amount of time remaining on any leasehold residence before they will consider it as adequate security. Regardless of whether you need a mortgage, you should bear in mind that it is likely that someone wanting to acquire your property in the future might well do, so in the event that they are unable to secure a mortgage, then the value of the property will likely be adversely impacted. Since 2008 many mortgage lenders have increased the required minimum lease length that they are prepared to lend on

Lender Requirement
Bank of Scotland Minimum 70 years from the date of the mortgage.
Barnsley Building Society 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term.
National Westminster Bank Mortgage term plus 30 years. For a Lifetime Mortgage, the term must be no less than 150 years minus the age of the Borrower.
Nationwide Building Society - Our minimum unexpired lease term is 55 years.
- There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start).

Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 55 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period is less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 55 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial, etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (Will be declined)
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house (does not apply to Shared Ownership)
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to every 5 years
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- Starting Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than 5 years
- Ground Rent escalation less than or equal to RPI

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty 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.

What makes us experts in Mickleover lease extensions?

The conveyancers that we work with handle Mickleover 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 conveyancing solicitor we work with provide it.

Mickleover Lease Extension Case Summaries:

Dylan, Mickleover, Derbyshire

During the course of the last few months Dylan, started to get near to the eighty-year threshold with the lease on his purpose- built flat in Mickleover. In buying his property two decades ago, the length of the lease was of no concern. Luckily, he recognised he would imminently be paying an escalated premium for a lease extension. Dylan arranged for a lease extension just in the nick of time in September. Dylan and the freeholder via the managing agents eventually settled on the final figure of £5,000 . If the lease had fallen below eighty years, the premium would have become more costly by at least £1,075.

Mickleover case:

In 2014 we were phoned by Mr and Mrs. O Edwards who, having acquired a recently refurbished apartment in Mickleover in May 1997. We are asked if we could shed any light on how much (roughly) price could be for a 90 year lease extension. Comparable premises in Mickleover with 100 year plus lease were in the region of £243,000. The average ground rent payable was £65 billed annually. The lease lapsed in 2084. Having 63 years unexpired we estimated the compensation to the freeholder for the lease extension to be between £20,000 and £23,000 exclusive of expenses.

Mickleover case:

In 2014 we were contacted by Dr Kian Jones who, having acquired a basement flat in Mickleover in July 1996. We are asked if we could estimate the compensation to the landlord would be to extend the lease by an additional years. Similar residencies in Mickleover with 100 year plus lease were in the region of £181,600. The average amount of ground rent was £55 collected monthly. The lease expired in 2073. Given that there were 52 years unexpired we approximated the compensation to the landlord for the lease extension to be within £30,400 and £35,200 exclusive of fees.