For those whose Mundesley flat is held on a long lease, our message is clear – if you do nothing, the property will eventually revert to the freeholder, leaving you empty-handed. The fewer the years remaining the less it is worth and the more expensive it will be to extend the lease.
It is generally considered that a property with in excess of 100 years remaining is worth roughly the same as a freehold. Where an further ninety years added to any lease with more than 35 years unexpired, the premises will be equivalent in value to a freehold for many years ahead.
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with handle Mundesley lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The conveyancing solicitor we work with provide it.
In 2014 Kai, came perilously close to the eighty-year threshold with the lease on his studio apartment in Mundesley. In buying his property two decades ago, the unexpired term was of minimal concern. Fortunately, it dawned on him that he would imminently be paying an escalated premium for Extending the lease. Kai was able to extend his lease at the eleventh hour in June. Kai and the landlord who owned the flat above in the end agreed on a premium of £5,000 . If he failed to meet the deadline, the price would have increased by a minimum £875.
Mr and Mrs. U Martin bought a first floor flat in Mundesley in November 2009. The question was if we could estimate the premium would be for a ninety year lease extension. Similar homes in Mundesley with 100 year plus lease were worth £225,400. The average ground rent payable was £45 invoiced annually. The lease terminated on 13 October 2090. Taking into account 64 years as a residual term we calculated the premium to the freeholder for the lease extension to be between £16,200 and £18,600 exclusive of legals.
Mr and Mrs. J Green acquired a basement apartment in Mundesley in February 2008. The dilemma was if we could estimate the premium would be to extend the lease by an additional years. Identical premises in Mundesley with a long lease were worth £270,000. The mid-range ground rent payable was £55 invoiced annually. The lease ran out on 9 November 2101. Given that there were 75 years remaining we approximated the compensation to the landlord for the lease extension to be within £9,500 and £11,000 not including expenses.