It’s an underpublicised certainty that a Monmouth residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is taken for granted in the early years due to the deflation being disguised by increases in the Monmouth property market.Where your lease has approximately 90 years left, you should start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips under 80 years - otherwise a higher premium will be due. Most leasehold owners in Monmouth will be able to extend under the legislation; however a conveyancer should be able to confirm whether you qualify for an extension. In some situations you may not be entitled. There are also strict timetables 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 over one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the residence will be worth the same as a freehold for many years ahead.
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Using our service gives you better control over the value of your Monmouth leasehold, as your property will be more valuable and marketable in terms of lease length should you decide to sell. The conveyancers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Nathan owned a studio flat in Monmouth being marketed with a lease of a little over fifty eight years unexpired. Nathan on an informal basis contacted his landlord a well known Manchester-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years on the basis of an increased rent to £200 annually. Ordinarily, ground rent would not be payable on a lease extension were Nathan to exercise his statutory right. Nathan procured expert legal guidance and was able to make an informed decision and deal with the matter and sell the property.
In 2011 we were e-mailed by Mr and Mrs. J Morris who, having owned a studio apartment in Monmouth in April 2007. The dilemma was if we could approximate the compensation to the landlord could be for a 90 year extension to my lease. Identical properties in Monmouth with an extended lease were worth £245,000. The average amount of ground rent was £50 invoiced annually. The lease elapsed on 14 September 2093. Taking into account 68 years left we estimated the premium to the landlord to extend the lease to be between £9,500 and £11,000 exclusive of legals.
Last February we were phoned by Dr Riley Rivera , who moved into a ground floor flat in Monmouth in August 2008. We are asked if we could shed any light on how much (approximately) compensation to the landlord would be for a ninety year extension to my lease. Similar homes in Monmouth with a long lease were in the region of £285,000. The mid-range amount of ground rent was £55 collected annually. The lease lapsed in 2104. Taking into account 79 years as a residual term we calculated the compensation to the freeholder to extend the lease to be between £13,300 and £15,400 plus professional charges.