Unfortunately that a Mortimer residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the early years due to the deflation being disguised by increases in the Mortimer property prices.Where your lease has approximately ninety years left, you need to start considering a lease extension. If lease term falls under 80 years, you will then be required to pay half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property The majority of flat owners in Mortimer will be able to extend under the legislation; however a lawyer should be able to clarify if you qualify for an extension. In some situations you may not qualify. There are also strict timetables and procedures to follow once the process has commenced and you will need to be guided by your lawyer from beginning to end of the formalities.
Leasehold residencies in Mortimer with over 100 years unexpired 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 premises. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and maintenance charges warrant 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; |
| Chelsea 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. |
| Coventry Building Society | 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. |
| 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. |
Irrespective of whether you are a tenant or a freeholder in Mortimer,the lease extension experts 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 Mortimer valuers.
Alexander owned a studio apartment in Mortimer on the market with a lease of a little over 59 years left. Alexander on an informal basis spoke with his freeholder being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to extend the lease to 125 years on the basis of a new rent at the outset set at £100 per annum and increase every twenty five years thereafter. No ground rent would be due on a lease extension were Alexander to invoke his statutory right. Alexander procured expert advice and was able to make a more informed judgement and handle with the matter and ending up with a market value flat.
In 2009 we were e-mailed by Dr Henry Adams who, having acquired a one bedroom apartment in Mortimer in April 2007. We are asked if we could shed any light on how much (roughly) price would be to extend the lease by 90 years. Identical flats in Mortimer with a long lease were worth £295,000. The average ground rent payable was £45 billed yearly. The lease concluded in 2101. Considering the 75 years left we estimated the compensation to the landlord for the lease extension to be within £8,600 and £9,800 exclusive of expenses.
Ms Ellen Michel owned a one bedroom apartment in Mortimer in April 1999. The dilemma was if we could shed any light on how much (roughly) premium could be to prolong the lease by a further 90 years. Similar residencies in Mortimer with a long lease were worth £250,400. The mid-range amount of ground rent was £65 billed yearly. The lease elapsed in 2090. Given that there were 64 years outstanding we calculated the premium to the freeholder to extend the lease to be between £19,000 and £22,000 exclusive of legals.