For those whose Newhaven property is held on a long lease, our message is clear – if no remedial action is taken, the property will eventually revert to your landlord, leaving you empty-handed. The shorter the lease the less it is worth and the more expensive it will be to extend the lease.
It is conventional wisdom that a property with more than 100 years remaining is worth approximately the same as a freehold. Where an additional 90 years added to all but the shortest lease, the premises will be worth the same as a freehold for decades to come.
| 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; |
| 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. |
| 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. |
| 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. |
| 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. |
Engaging our service gives you better control over the value of your Newhaven leasehold, as your property will be more valuable and marketable in respect of lease length should you wish to sell. The lawyers that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Austin owned a conversion flat in Newhaven on the market with a lease of a few days over 72 years left. Austin informally spoke with his landlord being 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 new rent at the outset set at £100 per annum and doubled every 25 years thereafter. No ground rent would be due on a lease extension were Austin to invoke his statutory right. Austin procured expert advice and was able to make an informed judgement and handle with the matter and readily saleable.
Last Winter we were approach by Mr and Mrs. A Stewart , who acquired a first floor apartment in Newhaven in January 2005. We are asked if we could estimate the compensation to the landlord could be for a ninety year extension to my lease. Comparative premises in Newhaven with an extended lease were worth £246,800. The average amount of ground rent was £60 collected every twelve months. The lease finished in 2076. Taking into account 50 years outstanding we approximated the compensation to the landlord to extend the lease to be between £44,700 and £51,600 not including fees.
Last Autumn we were approach by Mr F Davies , who bought a one bedroom flat in Newhaven in July 2006. The question was if we could approximate the compensation to the landlord would be for a ninety year extension to my lease. Identical properties in Newhaven with 100 year plus lease were valued around £203,200. The mid-range ground rent payable was £65 billed quarterly. The lease finished on 9 September 2087. Having 61 years remaining we approximated the compensation to the landlord for the lease extension to be within £20,000 and £23,000 not including professional charges.