Moreton leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease gets more expensive. It is the case that most Moreton tenants have the right to extend their lease by an additional ninety years by virtue of the 1993 Leasehold Reform Act. If you are a leasehold owner in Moreton you would be well advised to see if your lease has between seventy and ninety years left. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension increases dramatically as part of the premium you will incur is what is known as a marriage value
Leasehold premises in Moreton with more than 100 years remaining on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such situations there is often little upside in buying the freehold unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. Leases with fewer than 70 years should only be referred to the issuing office where the following scenario applies, as discretion may be applied subject to bank approval: • Property is located in any of the following prestigious developments: Cadogan, Crown, Grosvenor, Howard de Walden, Portman or Wellcome Trust Estates in Central London AND • The value of the property subject to the short remaining term is £500,000 or more AND • The loan to value does not exceed 90% for purchases, 90% like for like re-mortgages, 80% for re-mortgages with any element of capital raising and 80% for existing Barclays mortgage borrowers applying for additional borrowing; |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Retaining our service will provide you enhanced control over the value of your Moreton leasehold, as your property will be more valuable and saleable in relation to the lease length should you wish to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Last October Omar, started to get near to the 80-year threshold with the lease on his two bedroom flat in Moreton. In buying his property two decades ago, the length of the lease was of no interest. Thankfully, he became aware that he needed to take steps soon on a lease extension. Omar arranged for a lease extension at the eleventh hour in April. Omar and the freeholder via the managing agents ultimately settled on sum of £5,000 . If he failed to meet the deadline, the figure would have gone up by a minimum £1,150.
Last Summer we were contacted by Mr Adam Williams , who owned a studio flat in Moreton in June 1998. The question was if we could approximate the premium would likely be for a ninety year extension to my lease. Comparable premises in Moreton with 100 year plus lease were worth £200,800. The average ground rent payable was £65 collected quarterly. The lease expired on 9 July 2086. Having 60 years outstanding we approximated the premium to the landlord to extend the lease to be between £20,900 and £24,200 not including expenses.
Dr Laura Khan took over the lease of a purpose-built apartment in Moreton in February 2007. We are asked if we could estimate the compensation to the landlord would be for a 90 year extension to my lease. Comparative premises in Moreton with an extended lease were worth £260,000. The mid-range amount of ground rent was £50 billed per annum. The lease elapsed in 2097. Having 71 years outstanding we calculated the premium to the landlord to extend the lease to be within £9,500 and £11,000 not including expenses.