It’s an underpublicised truth that a Newmarket residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the loss of value being disguised by increases in the Newmarket property prices.Where your lease has approximately ninety years left, you need to start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips under 80 years - otherwise a higher amount will be payable. Most flat owners in Newmarket will be able to extend under the legislation; however a lawyer should be able to confirm whether you qualify for an extension. In some situations you may not be entitled. There are also strict timeframes and procedures to follow once the process is initiated and you will need to be guided by your lawyer from beginning to end of the process.
It is generally accepted that a residential leasehold with in excess of one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an further ninety years added to any lease with more than 30 years unexpired, the residence will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| 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; |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The lawyers that we work with undertake Newmarket 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 conveyancer we work with provide it.
Half a year ago Alfie, came precariously near to the 80-year threshold with the lease on his first floor apartment in Newmarket. In buying his home 19 years ago, the lease term was of no concern. Fortunately, it dawned on him that he would soon be paying way over the odds for Extending the lease. Alfie extended the lease at the eleventh hour last July. Alfie and the freeholder via the managing agents in the end settled on the final figure of £5,500 . If the lease had dropped below 80 years, the price would have become more exhorbitant by a minimum £900.
In 2014 we were e-mailed by Dr Charlotte Leroy who, having moved into a first floor flat in Newmarket in January 2009. We are asked if we could estimate the premium would be to prolong the lease by 90 years. Similar properties in Newmarket with 100 year plus lease were valued around £257,800. The mid-range ground rent payable was £65 invoiced quarterly. The lease expired on 15 April 2090. Given that there were 65 years unexpired we approximated the compensation to the landlord for the lease extension to be within £18,100 and £20,800 not including costs.
In 2013 we were called by Mrs N Gray who, having completed a garden apartment in Newmarket in September 1997. The dilemma was if we could approximate the compensation to the landlord would be to prolong the lease by 90 years. Similar properties in Newmarket with a long lease were in the region of £191,400. The average amount of ground rent was £55 invoiced monthly. The lease finished in 2079. Having 54 years unexpired we estimated the premium to the landlord to extend the lease to be between £34,200 and £39,600 exclusive of fees.