Unfortunately that a Par residential lease is a deteriorating asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the first few years due to the reduction being disguised by increases in the Par property market.Where your lease has approximately ninety years left, you should start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease dips lower than eighty years - otherwise a higher premium will be payable. The majority of flat owners in Par will be able to extend under the legislation; however a conveyancing solicitor should be able to clarify whether you qualify for an extension. In some situations you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancer throughout the formalities.
Leasehold premises in Par 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 premises. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and estate charges merit 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; |
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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. |
Lease extensions in Par can be a difficult process. We recommend you secure guidance from a conveyancing solicitor and surveyor 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 a wealth of experience procuring Par lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
Subsequent to lengthy discussions with the freeholder of her garden apartment in Par, Mia started the lease extension process just as her lease was approaching the critical eighty-year deadline. The legal work was finalised in May 2013. The landlord’s costs were kept to an absolute minimum.
Last month we were called by Mrs K Ali , who took over the lease of a studio apartment in Par in June 2009. The dilemma was if we could estimate the premium would likely be to prolong the lease by a further 90 years. Comparative homes in Par with an extended lease were worth £245,000. The average amount of ground rent was £50 invoiced annually. The lease ran out on 18 June 2093. Taking into account 68 years outstanding we calculated the premium to the freeholder to extend the lease to be between £9,500 and £11,000 plus professional charges.
In 2014 we were contacted by Mr and Mrs. Y Peterson who, having acquired a one bedroom flat in Par in October 2010. We are asked if we could estimate the price would be to prolong the lease by a further 90 years. Comparable residencies in Par with an extended lease were worth £285,000. The mid-range ground rent payable was £55 billed every twelve months. The lease termination date was on 17 October 2104. Given that there were 79 years remaining we estimated the premium to the landlord to extend the lease to be within £13,300 and £15,400 not including professional charges.