The value of Old Town leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of extending the lease can increase materialy once the unexpired lease term is less than eighty years
Leasehold residencies in Old Town with more than 100 years unexpired on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little upside in buying the reversionary interest unless savings on ground rent and estate 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. |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
The lawyers that we work with procure Old Town 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.
After protracted negotiations with the freeholder of her first floor apartment in Old Town, Victoria commenced the lease extension process just as the lease was nearing the all-important eighty-year threshold. The transaction was concluded in August 2006. The landlord’s costs were kept to an absolute minimum.
Last Christmas we were approach by Dr N Alexander , who completed a first floor apartment in Old Town in November 2009. The question was if we could shed any light on how much (approximately) premium would likely be for a ninety year lease extension. Comparative properties in Old Town with 100 year plus lease were worth £250,400. The average amount of ground rent was £65 collected every twelve months. The lease ended in 2090. Considering the 64 years remaining we calculated the premium to the landlord for the lease extension to be within £19,000 and £22,000 plus legals.
Last Autumn we were called by Mrs R Lefebvre , who moved into a purpose-built flat in Old Town in January 2001. We are asked if we could estimate the price would likely be for a ninety year lease extension. Identical premises in Old Town with a long lease were worth £184,000. The average amount of ground rent was £55 collected per annum. The lease elapsed on 27 October 2079. Having 53 years outstanding we calculated the compensation to the landlord for the lease extension to be between £28,500 and £33,000 not including costs.