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Main reasons to commence your Northwich lease extension


Main reasons to commence your Northwich lease extension today:

Increase your lease and increase your Northwich property value

The market value of a leasehold property in Northwich depends on how long the lease has left to run. If it is close to or fewer than eighty years you should envisage problems on re-sale, so it is advisable to arrange for a lease extension prior to buying. It is ideal to start the process of extending the lease is when a lease still has 82 years unexpired so that a lease extension can be concluded well before the eighty year cut off point. Statute entitles Northwich qualifying lessees to an additional term of 90 years in addition to the remaining term, at a notional rent (no ground rent). The intention 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.

An extended lease has roughly the same value as a freehold

It is conventional wisdom that a property with in excess of 100 years remaining is worth approximately the equivalent as a freehold. Where an additional 90 years added to any lease with more than 30 years unexpired, the property will be worth the same as a freehold for many years ahead.

Lending institutions may decide not to finance a property with a short lease

Most mortgage lenders have narrowed their lending criteria in recent years and borrowers are finding it increasingly difficult to raise funding or re-mortgage against property with shorter lease terms, particularly under seventy years as they are considered to be inadequate security.

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.
Coventry Building Society 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.
Lloyds TSB Scotland Minimum 70 years from the date of the mortgage.
Nationwide Building Society - Our minimum unexpired lease term is 55 years, except where lending is over 85% of the purchase price/valuation on a second hand flat, in which case our minimum unexpired term is 90 years.
- There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start).

Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer
- Where lending is over 85% of the purchase price/valuation on a second hand flat and the unexpired lease term on the offer is 90 years or more - only advise us if the actual lease term is less than 90 years.

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 55 years
- Unexpired lease term less than 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period is less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 55 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial, etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years (Minimum 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat)
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (Will be declined)
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house (does not apply to Shared Ownership)
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn Ground Rent (Annual Rent) charges

For the avoidance of doubt, any New Build properties completed but not sold pre-30 June 2022 will only be acceptable if the Lease conforms to the above guidance.

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years.

Lease Extensions

We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to Issuing Office.
Virgin 85 years at the time of completion. If it's less, we require it to be extended on or before completion.

What makes us experts in Northwich lease extensions?

Lease extensions in Northwich can be a difficult process. We recommend you secure professional help from a lawyer and valuer with experience in lease extensions.

We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge dealing with Northwich lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.

Northwich Lease Extension Case Studies:

Kai, Northwich, Cheshire

Last Christmas Kai, started to get close to the 80-year mark with the lease on his two bedroom apartment in Northwich. Having purchased his home two decades ago, the length of the lease was of minimal bearing. by good luck, he realised he needed to take steps soon on a lease extension. Kai arranged for a lease extension just in the nick of time last April. Kai and the landlord who owned the flat above eventually agreed on sum of £5,500 . If the lease had slid to less than 80 years, the amount would have escalated by a minimum £900.

Northwich case:

Dr Laura James was assigned a lease of a one bedroom flat in Northwich in October 2004. The dilemma was if we could shed any light on how much (roughly) compensation to the landlord would likely be to extend the lease by 90 years. Comparative residencies in Northwich with 100 year plus lease were valued about £191,400. The mid-range amount of ground rent was £55 billed monthly. The lease came to a finish in 2078. Taking into account 54 years outstanding we approximated the compensation to the landlord to extend the lease to be between £34,200 and £39,600 plus costs.

Northwich case:

In 2012 we were approached by Mr Y Lefèvre who, having moved into a purpose-built apartment in Northwich in November 1996. We are asked if we could approximate the price would likely be to extend the lease by an additional years. Comparative residencies in Northwich with a long lease were worth £295,000. The average ground rent payable was £45 invoiced every twelve months. The lease ended on 14 November 2098. Taking into account 74 years as a residual term we calculated the compensation to the landlord for the lease extension to be between £8,600 and £9,800 exclusive of costs.