Owning a flat usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. The lease will normally be granted for a prescribed period of time , usually 99 or 125 years, although we have witnessed longer and shorter terms in Morpeth. Clearly, the period of lease remaining shortens as time goes by. This is often overlooked and only raises itself as an issue when the flat or house needs to be disposed of or re-mortgaged. The fewer the years remaining the less it is worth and the more it will cost to extend the lease. Qualifying long lease owners in Morpeth have the legal entitlement to extend the lease for a further ninety years under the 1993 Leasehold Reform Act. You should give careful deliberation before putting off your Morpeth lease extension. Holding off the cost now simply increases the price you will ultimately incur for a lease extension
Leasehold properties in Morpeth with over 100 years remaining on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such circumstances there is often little upside in buying the reversionary interest unless savings on ground rent and maintenance charges merit it.
| 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. |
| 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; |
| 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. |
| 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 gives you better control over the value of your Morpeth leasehold, as your property will be more valuable and saleable in respect of lease length should you wish to sell. The conveyancers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Off the back of lengthy negotiations with the freeholder of her purpose-built apartment in Morpeth, Leah started the lease extension process as the eighty year threshold was quickly nearing. The transaction completed in February 2011. The landlord’s charges were negotiated to about 650 pounds.
In 2013 we were e-mailed by Ms Harriet Simon who, having purchased a first floor flat in Morpeth in January 1997. The question was if we could shed any light on how much (roughly) premium would be for a 90 year lease extension. Identical residencies in Morpeth with a long lease were in the region of £174,200. The mid-range ground rent payable was £55 billed yearly. The lease ran out in 2077. Taking into account 51 years as a residual term we approximated the compensation to the freeholder for the lease extension to be within £31,400 and £36,200 plus costs.
Last Summer we were called by Mr and Mrs. I Murphy , who moved into a basement flat in Morpeth in July 2005. We are asked if we could approximate the compensation to the landlord would likely be for a ninety year lease extension. Similar properties in Morpeth with 100 year plus lease were valued about £285,000. The average ground rent payable was £45 billed annually. The lease concluded in 2097. Considering the 71 years unexpired we approximated the premium to the landlord to extend the lease to be between £12,400 and £14,200 exclusive of fees.