The value of New Invention 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 substantially once the remaining term is less than 80 years
It is generally accepted that a residential leasehold with over one hundred years unexpired lease term is worth roughly the same as a freehold. Where an further 90 years added to all but the shortest lease, the property 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; |
| Santander | If the property is leasehold, the remaining unexpired lease term at the end of the new mortgage term must be at least 50 years where any part of the mortgage is on Interest Only and 30 years if all loan parts are on Capital Repayment and Interest. You must report the unexpired lease term to us and await our instructions if:
|
| 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 |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The lawyers that we work with handle New Invention 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.
Ben owned a studio flat in New Invention being sold with a lease of a few days over sixty years outstanding. Ben on an informal basis spoke with his landlord a well known Bristol-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years subject to a rise in the rent to £125 per annum. Ordinarily, ground rent would not be due on a lease extension were Ben to invoke his statutory right. Ben procured expert advice and secured an acceptable resolution informally and sell the property.
Last May we were approach by Ms Jordan Díaz , who took over the lease of a one bedroom flat in New Invention in January 1998. The question was if we could estimate the compensation to the landlord would likely be for a ninety year extension to my lease. Comparable properties in New Invention with an extended lease were worth £295,000. The average amount of ground rent was £45 collected quarterly. The lease concluded on 25 October 2101. Given that there were 75 years left we calculated the compensation to the landlord for the lease extension to be between £8,600 and £9,800 not including expenses.
Last Winter we were e-mailed by Mr R Brown , who acquired a purpose-built flat in New Invention in May 1995. The question was if we could estimate the premium could be to prolong the lease by ninety years. Identical flats in New Invention with an extended lease were in the region of £250,400. The mid-range ground rent payable was £65 collected quarterly. The lease finished on 15 February 2090. Given that there were 64 years as a residual term we approximated the compensation to the landlord for the lease extension to be within £19,000 and £22,000 plus legals.