Unfortunately that a Par residential lease is a deteriorating asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the first few years due to the loss of value being disguised by increases in the Par property prices.Once your lease nears 85ish years, you should start thinking about a lease extension. If the number of years remaining dips below eighty years, you will then be required to pay 50% of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property The majority of leasehold owners in Par will be able to extend under the legislation; however a conveyancer will be able to confirm whether you qualify for an extension. In some situations you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process is instigated and you will need to be guided by your lawyer for the duration of the formalities.
Leasehold premises in Par with in excess of one hundred years outstanding on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little to be gained by buying the freehold unless savings on ground rent and estate charges warrant it.
| 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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 Par 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.
Alfie owned a high value apartment in Par being marketed with a lease of a few days over 61 years outstanding. Alfie informally contacted his freeholder being a well known London-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years subject to a rise in the rent to £100 per annum. No ground rent would be due on a lease extension were Alfie to invoke his statutory right. Alfie obtained expert advice and was able to make an informed decision and deal with the matter and sell the flat.
In 2014 we were contacted by Dr Amelia Hernández who, having was assigned a lease of a one bedroom flat in Par in June 2010. We are asked if we could shed any light on how much (roughly) price could be to extend the lease by ninety years. Similar properties in Par with 100 year plus lease were in the region of £235,200. The mid-range amount of ground rent was £45 invoiced quarterly. The lease expiry date was in 2092. Taking into account 66 years left we estimated the premium to the freeholder for the lease extension to be within £12,400 and £14,200 plus fees.
Ms M González took over the lease of a garden flat in Par in February 1997. The dilemma was if we could estimate the compensation to the landlord would be to prolong the lease by 90 years. Comparative flats in Par with an extended lease were in the region of £275,000. The average amount of ground rent was £55 collected per annum. The lease ran out in 2103. Given that there were 77 years remaining we approximated the compensation to the landlord to extend the lease to be within £13,300 and £15,400 not including professional charges.