Mildmay residential property held on a long lease is a wasting asset because a leaseholder only owns the property for a set term.
It is conventional wisdom that a property with in excess of 100 years remaining is worth roughly the equivalent as a freehold. Where an further 90 years added to any lease with more than 30 years left, the residence will be equivalent in value to a freehold for decades to come.
| 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. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| 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. |
Regardless of whether you are a tenant or a landlord in Mildmay,the lease extension solicitors that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Mildmay valuers.
During the course of the last few months Edward, started to get near to the 80-year mark with the lease on his two bedroom flat in Mildmay. In buying his flat twenty years previously, the unexpired term was of no interest. Thankfully, it dawned on him that he needed to take action soon on Extending the lease. Edward was able to extend his lease just ahead of time last July. Edward and the freeholder in the end agreed on a premium of £5,500 . If the lease had fallen below eighty years, the amount would have escalated by a minimum £850.
Mr and Mrs. S David moved into a ground floor flat in Mildmay in May 2011. The question was if we could approximate the premium would likely be to extend the lease by an additional years. Comparable flats in Mildmay with a long lease were worth £285,000. The mid-range ground rent payable was £45 billed every twelve months. The lease termination date was in 2097. Given that there were 71 years remaining we calculated the premium to the freeholder to extend the lease to be within £12,400 and £14,200 exclusive of expenses.
Last May we were contacted by Dr L Moreau , who acquired a one bedroom flat in Mildmay in April 2007. We are asked if we could approximate the price would likely be to prolong the lease by 90 years. Similar flats in Mildmay with an extended lease were valued about £225,800. The mid-range ground rent payable was £60 invoiced monthly. The lease finished in 2086. Given that there were 60 years remaining we approximated the premium to the landlord for the lease extension to be between £24,700 and £28,600 not including expenses.