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Top reasons for Mold lease extension


Top reasons for lease extension now:

Increase your lease and increase your Mold property value

Owning a flat usually means owning a lease of the property, which has a set term of years. The lease will usually be granted for a set period of time , usually 99 or 125 years, although we have witnessed longer and shorter terms in Mold. Clearly, the period of lease left reduces as time goes by. This is often ignored and only raises itself as an issue when the residence has to be sold or re-mortgaged. The fewer the years remaining the lower the value of the property and the more expensive it will be to extend the lease. Qualifying leaseholders in Mold have the right to extend the lease for a further ninety years under legislation. Do give due attention before delaying your Mold lease extension. Holding off that expense now only increases the price you will ultimately incur for a lease extension

An extended lease has roughly the same value as a freehold

It is conventional wisdom that a residential leasehold with more than one hundred years remaining is worth approximately the same as a freehold. Where an additional 90 years added to any lease with more than 30 years remaining, the residence will be equivalent in value to a freehold for decades to come.

Mortgage lenders may not grant a mortgage with a short lease

The trend since over the last decade has been for lenders to tighten lending requirements across the board - this has extended to the types of security over which the home loan is to be granted. This has meant the unexpired lease term required by mortgage companies has increased. Historically lenders were content with twenty years plus the term of the loan - typically 50 year leases but those requirements have been chipped away by the requirement for lengthy leases - many use a minimum term of 75 years as a prerequisite.

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.
Barnsley Building Society 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term.
Birmingham Midshires Minimum 70 years from the date of the mortgage.
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)
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- 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
- A lease subject to a peppercorn Ground Rent (Annual Rent) charges

For the avoidance of doubt, any New Build properties completed but not sold pre-30 June 2022 will only be acceptable if the Lease conforms to the above guidance.

* 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.

Lease Extensions

We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to Issuing Office.
TSB Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.

What makes us experts in Mold lease extensions?

Regardless of whether you are a tenant or a landlord in Mold,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 in-depth market knowledge and the close ties they enjoy with Mold valuers.

Mold Lease Extension Case Summaries:

Laura, Mold, Flintshire,

After lengthy negotiations with the landlord of her garden apartment in Mold, Laura initiated the lease extension process just as the lease was coming close to the critical 80-year mark. The lease extension was finalised in January 2006. The landlord’s costs were restricted to approximately 550 pounds.

Mold case:

Mr Michael Richardson purchased a ground floor flat in Mold in May 1998. The dilemma was if we could estimate the compensation to the landlord could be for a 90 year lease extension. Comparative premises in Mold with 100 year plus lease were in the region of £260,000. The mid-range amount of ground rent was £50 collected monthly. The lease concluded in 2095. Taking into account 73 years unexpired we calculated the compensation to the freeholder for the lease extension to be within £9,500 and £11,000 not including professional charges.

Mold case:

In 2012 we were phoned by Mr and Mrs. D Smith who, having took over the lease of a one bedroom apartment in Mold in March 1999. We are asked if we could approximate the premium would likely be for a ninety year extension to my lease. Comparable residencies in Mold with 100 year plus lease were in the region of £264,000. The average amount of ground rent was £60 invoiced every twelve months. The lease terminated on 16 September 2075. Having 53 years remaining we approximated the compensation to the landlord for the lease extension to be between £37,100 and £42,800 not including costs.