Ormskirk leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease gets more expensive. It is the case that most Ormskirk tenants have the right to extend their lease by an additional ninety years under the 1993 Leasehold Reform Act. Where you are a leasehold owner in Ormskirk you would be well advised to check if your lease has between seventy and ninety years left. In particular once the remaining lease term slips under eighty years, the cost of any lease extension increases dramatically as part of the premium you pay is what is known as a marriage value
It is conventional wisdom that a property with more than 100 years unexpired lease term is worth approximately the same as a freehold. Where an additional 90 years added to any lease with more than 30 years remaining, the property will be worth the same as a freehold for many years in the future.
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Using our service gives you increased control over the value of your Ormskirk 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 wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Thomas was the the leasehold owner of a studio flat in Ormskirk being marketed with a lease of fraction over 72 years remaining. Thomas on an informal basis spoke with his freeholder being a well known London-based freehold company for a lease extension. The landlord was keen to give an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £100 per annum and doubled every 25 years thereafter. Ordinarily, ground rent would not be due on a lease extension were Thomas to exercise his statutory right. Thomas obtained expert legal guidance and was able to make an informed judgement and handle with the matter and sell the property.
In 2009 we were contacted by Dr A Laurent who, having purchased a one bedroom apartment in Ormskirk in November 2003. The dilemma was if we could shed any light on how much (roughly) premium could be for a 90 year lease extension. Similar residencies in Ormskirk with an extended lease were in the region of £265,000. The mid-range ground rent payable was £50 collected annually. The lease finished in 2098. Given that there were 73 years as a residual term we estimated the premium to the freeholder for the lease extension to be within £9,500 and £11,000 not including expenses.
Dr Y Gómez acquired a purpose-built apartment in Ormskirk in August 2001. The question was if we could estimate the premium would be to prolong the lease by ninety years. Similar properties in Ormskirk with an extended lease were in the region of £264,000. The average amount of ground rent was £60 invoiced per annum. The lease came to a finish on 6 November 2078. Considering the 53 years left we approximated the compensation to the landlord for the lease extension to be between £37,100 and £42,800 not including fees.