The basic rule is, all other things holding equal, the shorter the lease the more costly the premium. Qualifying leaseholders in New Forest have the legal entitlement to extend the lease for an additional 90 years under legislation. Do give careful consideration before delaying your New Forest lease extension. Shelving that expense now simply escalates the amount you will ultimately have to pay for a lease extension.
Leasehold premises in New Forest with in excess of one hundred years outstanding on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and maintenance charges justify 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 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Irrespective of whether you are a tenant or a landlord in New Forest,the lease extension experts that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with New Forest valuers.
Alfie owned a studio flat in New Forest on the market with a lease of just over 72 years remaining. Alfie informally spoke with his freeholder a well known London-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years on the basis of a rise in the rent to £125 annually. No ground rent would be payable on a lease extension were Alfie to exercise his statutory right. Alfie obtained expert advice and was able to make an informed decision and deal with the matter and ending up with a market value flat.
Last Christmas we were contacted by Dr R Morris , who took over the lease of a first floor flat in New Forest in March 2008. We are asked if we could estimate the compensation to the landlord would be to prolong the lease by 90 years. Comparative flats in New Forest with a long lease were worth £218,000. The mid-range ground rent payable was £45 billed yearly. The lease finished in 2088. Given that there were 63 years remaining we estimated the compensation to the landlord to extend the lease to be within £17,100 and £19,800 exclusive of expenses.
In 2013 we were contacted by Mr and Mrs. V Howard who, having completed a one bedroom flat in New Forest in August 2012. The question was if we could approximate the premium would likely be to extend the lease by 90 years. Identical premises in New Forest with 100 year plus lease were in the region of £265,000. The average amount of ground rent was £50 invoiced monthly. The lease concluded on 8 June 2099. Considering the 74 years remaining we calculated the premium to the freeholder for the lease extension to be between £9,500 and £11,000 plus legals.