New Mills leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease becomes more expensive. It is the case that most New Mills tenants have the right to extend their lease by an additional 90 years by virtue of the 1993 Leasehold Reform Act. If you are a leasehold owner in New Mills you really ought to see if your lease has between 70 and ninety years remaining. In particular once the remaining lease term slips under 80 years, the amount payable for any lease extension sharply increases as part of the premium you pay is what is known as a marriage value
Leasehold premises in New Mills with over one hundred years outstanding on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such circumstances there is often little upside in purchasing the reversionary interest unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| Chelsea 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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 procure New Mills 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.
Last October Gabriel, started to get near to the eighty-year mark with the lease on his garden flat in New Mills. In buying his home twenty years previously, the lease term was of no concern. Luckily, he became aware that he would soon be paying an escalated premium for a lease extension. Gabriel extended the lease at the eleventh hour last May. Gabriel and the freeholder via the managing agents ultimately agreed on a premium of £6,000 . If he failed to meet the deadline, the amount would have become more exhorbitant by at least £1,025.
Last Summer we were called by Mr U Ward , who purchased a ground floor apartment in New Mills in September 2004. The question was if we could shed any light on how much (approximately) price would be to prolong the lease by an additional years. Comparative flats in New Mills with 100 year plus lease were valued around £225,800. The mid-range amount of ground rent was £60 billed monthly. The lease expired in 2085. Given that there were 60 years outstanding we approximated the premium to the landlord for the lease extension to be within £23,800 and £27,400 not including expenses.
Mrs K Johnson acquired a garden flat in New Mills in June 1996. The question was if we could shed any light on how much (roughly) premium could be to extend the lease by a further 90 years. Identical residencies in New Mills with a long lease were worth £210,000. The mid-range amount of ground rent was £50 collected quarterly. The lease terminated on 4 April 2105. Given that there were 80 years outstanding we estimated the compensation to the landlord for the lease extension to be within £8,600 and £9,800 exclusive of professional charges.