Nayland leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease becomes more expensive. The majority of owners of residential leasehold property in Nayland enjoy rights under legislation to extend the terms of their leases. If you are a leasehold owner in Nayland you really ought to investigate if your lease has between 70 and 90 years remaining. In particular once the remaining lease term slips under 80 years, the premium due on any lease extension sharply increases as part of the premium you pay is what is known as a marriage value
Leasehold residencies in Nayland with over one hundred years left on the lease are sometimes regarded as a ‘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 buying the freehold unless savings on ground rent and maintenance charges merit it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| 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. |
The conveyancing solicitors that we work with handle Nayland 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 lawyer we work with provide it.
Jacob owned a high value apartment in Nayland on the market with a lease of a few days over sixty years outstanding. Jacob informally contacted his landlord 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 subject to a new rent to start with set at £150 per annum and doubled every 25 years thereafter. No ground rent would be due on a lease extension were Jacob to exercise his statutory right. Jacob obtained expert legal guidance and was able to make an informed judgement and handle with the matter and ending up with a market value flat.
Last Autumn we were called by Mr and Mrs. G Murphy , who bought a first floor flat in Nayland in August 2008. The dilemma was if we could estimate the compensation to the landlord could be for a ninety year extension to my lease. Comparative premises in Nayland with a long lease were valued about £200,800. The mid-range amount of ground rent was £65 invoiced yearly. The lease lapsed in 2085. Considering the 60 years as a residual term we approximated the compensation to the landlord to extend the lease to be between £20,900 and £24,200 exclusive of professional charges.
In 2009 we were approached by Ms Laura Mercier who, having moved into a garden apartment in Nayland in June 1997. We are asked if we could approximate the compensation to the landlord could be to extend the lease by an additional years. Comparable homes in Nayland with 100 year plus lease were worth £255,000. The mid-range ground rent payable was £50 billed monthly. The lease elapsed in 2096. Considering the 71 years remaining we approximated the compensation to the landlord to extend the lease to be within £9,500 and £11,000 exclusive of legals.