The re-sale value of a leasehold property in Newburn is impacted by how long the lease has remaining. If it is close to or less than eighty years you should foresee difficulties on re-sale, so it is recommended to arrange for the lease to be extended before purchasing. It is ideal to start the lease extension process when the lease still has 82 years remaining so that a lease extension can be addressed well before the 80 year threshold. Leasehold Reform legislation entitles Newburn qualifying lessees to obtain a lease extension of ninety years in addition to the remaining lease term at a peppercorn rent (that is, rent free). The purpose of the valuation is to arrive at an opinion of the amount payable by the lessee to the freeholder for the purchase of the lease extension.
Leasehold residencies in Newburn with in excess of one hundred years unexpired 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 purchasing the reversionary interest unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Engaging our service gives you better control over the value of your Newburn leasehold, as your property will be more valuable and marketable in terms of lease length should you decide to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Kai owned a conversion apartment in Newburn on the market with a lease of a few days over 61 years left. Kai informally approached his freeholder 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 on the basis of a rise in the rent to £200 annually. No ground rent would be payable on a lease extension were Kai to exercise his statutory right. Kai obtained expert legal guidance and was able to make an informed decision and handle with the matter and readily saleable.
Dr R Johnson owned a studio apartment in Newburn in October 2002. We are asked if we could approximate the price could be for a ninety year extension to my lease. Similar homes in Newburn with 100 year plus lease were in the region of £210,000. The mid-range ground rent payable was £50 billed monthly. The lease concluded on 21 June 2106. Considering the 80 years remaining we estimated the compensation to the landlord to extend the lease to be between £8,600 and £9,800 plus fees.
In 2012 we were called by Mr and Mrs. R Martínez who, having completed a ground floor flat in Newburn in August 2011. The question was if we could estimate the compensation to the landlord could be for a ninety year lease extension. Comparable properties in Newburn with an extended lease were in the region of £275,000. The mid-range amount of ground rent was £45 collected annually. The lease ran out on 4 February 2095. Taking into account 69 years outstanding we calculated the compensation to the landlord for the lease extension to be within £12,400 and £14,200 not including fees.