If you are facing a significant premium because your lease in Nantyglo has dropped toward the 80-year mark, your previous lawyer may be at fault. Our panel of experts specialise in recovering lease extension costs from negligent firms who failed to protect your investment.
Top reasons for lease extension now:
A Nantyglo leasehold property depreciates with the years remaining on the lease.
The market value of Nantyglo leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of extending the lease can increase materialy once the remaining term is below than eighty years
Nantyglo property with a lease extension has roughly the same value as a freehold
Leasehold residencies in Nantyglo with over 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 premises. In such circumstances there is often little upside in buying the freehold unless savings on ground rent and service charges warrant it.
Mortgage lenders will not issue a mortgage on a short lease
Lending institutions have specific criteria when lending funds secured on leasehold property. Some will simply refuse lend at all once the residual lease term goes under a certain unexpired lease term. Many Banks and Building Societies will not consider property with an unexpired below 75 years as acceptable security. In addition to impacting your ability to sell, it is also relevant where you are seeking to refinance your Nantyglo home.
| Lender |
Requirement
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|---|
| Birmingham Midshires |
Minimum 70 years from the date of the mortgage.
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| 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.
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| Leeds Building Society |
85 years remaining from the start of the mortgage.
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| The Mortgage Works |
Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:
Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer
New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer
Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.
SECOND HAND PROPERTIES
Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI
NEW BUILD PROPERTIES (includes office conversions)
Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges
For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance
* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years
Lease Extensions We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where a proposed Lease Extension does not meet these requirements, however you feel that this is in the best interest for our mutual client, please refer all details to the Issuing Office for us to consider.
Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning.
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| Yorkshire 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.
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What makes us experts in Nantyglo lease extensions?
Engaging our service will provide you increased control over the value of your Nantyglo leasehold, as your property will be more valuable and marketable in relation to the lease length should you decide to sell.
The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Nantyglo Lease Extension Case Summaries:
Jacob, Nantyglo, Abertillery
Last Autumn Jacob, came seriously close to the 80-year threshold with the lease on his first floor apartment in Nantyglo. Having bought his flat 19 years previously, the lease term was of minimal interest. As luck would have it, he became aware that he needed to take steps soon on Extending the lease. Jacob was able to extend his lease just under the wire in June. Jacob and the freeholder eventually agreed on the final figure of £5,000 . If the lease had slid lower than eighty years, the sum would have increased by a minimum £900.
Nantyglo case:
In 2012 we were approached by Dr B Hall who, having acquired a studio apartment in Nantyglo in July 2000. The question was if we could estimate the compensation to the landlord could be to prolong the lease by 90 years. Comparable properties in Nantyglo with a long lease were in the region of £208,600. The mid-range ground rent payable was £60 collected every twelve months. The lease concluded in 2083. Taking into account 57 years unexpired we estimated the compensation to the landlord to extend the lease to be within £30,400 and £35,200 exclusive of costs.
Nantyglo case:
Dr K White took over the lease of a one bedroom apartment in Nantyglo in February 2009. The question was if we could estimate the premium could be for a ninety year extension to my lease. Comparative homes in Nantyglo with an extended lease were worth £200,000. The mid-range amount of ground rent was £50 invoiced every twelve months. The lease expiry date was in 2103. Having 77 years as a residual term we estimated the premium to the landlord to extend the lease to be between £8,600 and £9,800 not including fees.