When it comes to residential leasehold premises in Old Stratford, you are actually purchasing an entitlement to reside in a property for a set period of time. These days flat leases typically tend to be for 99 years or 125. Many leasehold owners become complacent as this seems like a long period of time, you may consider a lease extension sooner as opposed to later. The general rule is that the shorter the lease is the cost of extending the lease increases markedly particularly once there are less than eighty years left. Leasehold owners in Old Stratford with a lease nearing 81 years unexpired should seriously think of extending it without delay. Once the lease term has under 80 years left, under the relevant statute the freeholder is entitled to calculate and levy a greater premium, assessed on a technical calculation, strangely termed as “marriage value” which is due.
Leasehold properties in Old Stratford with in excess of one hundred years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and estate charges warrant it.
| 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; |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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. |
The conveyancers that we work with handle Old Stratford 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 conveyancing solicitor we work with provide it.
Last October Freddie, started to get close to the 80-year threshold with the lease on his first floor flat in Old Stratford. In buying his home two decades ago, the lease term was of little relevance. by good luck, he realised he would imminently be paying an escalated premium for Extending the lease. Freddie arranged for a lease extension just in the nick of time last March. Freddie and the freeholder via the managing agents in the end settled on sum of £5,000 . If he failed to meet the deadline, the figure would have become more costly by a minimum £1,025.
In 2010 we were approached by Ms N Girard who, having bought a studio apartment in Old Stratford in March 2004. The dilemma was if we could approximate the premium would likely be for a ninety year extension to my lease. Similar homes in Old Stratford with 100 year plus lease were valued around £186,000. The mid-range ground rent payable was £65 collected quarterly. The lease expired on 19 August 2083. Having 58 years remaining we estimated the compensation to the freeholder for the lease extension to be within £24,700 and £28,600 not including fees.
In 2013 we were phoned by Mrs Isabel François who, having purchased a ground floor flat in Old Stratford in January 2010. The question was if we could shed any light on how much (roughly) premium would likely be to extend the lease by 90 years. Comparative premises in Old Stratford with an extended lease were worth £250,000. The mid-range ground rent payable was £50 billed monthly. The lease came to a finish in 2094. Taking into account 69 years remaining we calculated the compensation to the freeholder for the lease extension to be within £9,500 and £11,000 exclusive of fees.