Nechells leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease becomes more expensive. Legislation has been in place for sometime now allowing qualifying Nechells residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Nechells you would be well advised to check if your lease has between 70 and 90 years remaining. In particular once the remaining lease term slips under 80 years, the amount payable for any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
Leasehold premises in Nechells with in excess of 100 years outstanding 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 home. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and estate charges warrant 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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. |
Retaining our service gives you better control over the value of your Nechells 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 in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
After lengthy correspondence with the freeholder of her ground floor flat in Nechells, Mia commenced the lease extension process just as the lease was coming close to the critical 80-year threshold. The lease extension was finalised in March 2007. The landlord’s fees were restricted to below 450 GBP.
In 2013 we were e-mailed by Ms D Nguyen who, having completed a purpose-built flat in Nechells in March 2011. We are asked if we could estimate the compensation to the landlord would likely be to extend the lease by 90 years. Identical properties in Nechells with a long lease were valued around £256,600. The mid-range ground rent payable was £60 collected monthly. The lease end date was in 2077. Having 52 years unexpired we approximated the premium to the landlord to extend the lease to be within £39,000 and £45,000 plus expenses.
Last month we were called by Mr W Clarke , who took over the lease of a one bedroom apartment in Nechells in May 2004. We are asked if we could shed any light on how much (roughly) compensation to the landlord would be for a 90 year extension to my lease. Comparable residencies in Nechells with a long lease were worth £218,000. The average amount of ground rent was £45 billed annually. The lease ended on 10 April 2088. Considering the 63 years as a residual term we calculated the premium to the freeholder to extend the lease to be within £17,100 and £19,800 not including costs.