Owning a flat usually means owning a lease of the property, which has a finite term of years. The lease will normally be granted for a prescribed period of time , ordinarily 99 or 125 years, although we have seen longer and shorter terms in Minehead. Inevitably, the period of lease left reduces over time. This is often overlooked and only raises itself as an issue when the property has to be sold or refinanced. The shorter the lease the less it is worth and the more expensive it will be to extend the lease. Qualifying long lease owners in Minehead have the right to extend the lease for an additional 90 years under Leasehold Reform legislation. Do give careful attention before putting off your Minehead lease extension. Holding off that expense now simply increases the price you will ultimately incur for a lease extension
It is conventional wisdom that a property with in excess of 100 years unexpired lease term is worth approximately the same as a freehold. Where an further 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
| 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. |
Engaging our service will provide you increased control over the value of your Minehead leasehold, as your property will be more valuable and marketable in relation to the lease length should you wish to sell. The conveyancers that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Sam owned a 2 bedroom flat in Minehead being marketed with a lease of just over fifty eight years outstanding. Sam informally spoke with his landlord being a well known London-based freehold company and enquired on a premium to extend the lease. The freeholder was keen to agree an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent at the outset set at £100 per annum and doubled every 25 years thereafter. No ground rent would be due on a lease extension were Sam to exercise his statutory right. Sam obtained expert advice and secured satisfactory deal without resorting to tribunal and readily saleable.
In 2012 we were approached by Mr M Wright who, having moved into a garden apartment in Minehead in April 1999. We are asked if we could estimate the premium would likely be to extend the lease by ninety years. Comparable flats in Minehead with an extended lease were in the region of £250,000. The mid-range amount of ground rent was £50 invoiced yearly. The lease expired on 9 January 2093. Having 68 years unexpired we approximated the premium to the freeholder to extend the lease to be between £9,500 and £11,000 plus professional charges.
Mr G Wilson owned a ground floor flat in Minehead in March 2005. We are asked if we could estimate the compensation to the landlord would be for a 90 year extension to my lease. Identical properties in Minehead with a long lease were in the region of £285,000. The average ground rent payable was £55 collected yearly. The lease expiry date was on 15 July 2104. Given that there were 79 years as a residual term we estimated the premium to the landlord to extend the lease to be within £13,300 and £15,400 plus costs.