Par leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease becomes more expensive. Legislation has been in place for sometime now allowing qualifying Par residential leaseholders to extend the terms of long leases. Where you are a leasehold owner in Par you should check if your lease has between 70 and ninety years left. In particular once the remaining lease term slips under eighty years, the amount payable for any lease extension increases dramatically as part of the premium you will incur is what is known as a marriage value
Leasehold properties in Par with more than 100 years remaining on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little upside in buying the freehold unless savings on ground rent and estate charges justify it.
| Lender | Requirement |
|---|---|
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Engaging our service will provide you enhanced control over the value of your Par leasehold, as your property will be more valuable and marketable in relation to the 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.
Nathaniel was the the leasehold proprietor of a high value apartment in Par on the market with a lease of a few days over sixty years left. Nathaniel informally contacted his freeholder being a well known local-based freehold company for a lease extension. The freeholder was keen to agree an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £50 per annum. Ordinarily, ground rent would not be payable on a lease extension were Nathaniel to invoke his statutory right. Nathaniel obtained expert advice and secured an acceptable resolution informally and sell the flat.
Last month we were contacted by Mr Jonathan Allen , who owned a garden apartment in Par in October 2007. The question was if we could approximate the premium could be for a 90 year lease extension. Comparative homes in Par with a long lease were valued around £193,400. The average amount of ground rent was £65 billed annually. The lease ran out on 26 June 2085. Considering the 59 years as a residual term we calculated the compensation to the freeholder to extend the lease to be between £21,900 and £25,200 exclusive of professional charges.
In 2011 we were phoned by Mr F Carter who, having purchased a one bedroom apartment in Par in October 2011. We are asked if we could estimate the compensation to the landlord would likely be to extend the lease by ninety years. Identical properties in Par with 100 year plus lease were worth £255,000. The mid-range ground rent payable was £50 invoiced annually. The lease lapsed on 13 August 2096. Given that there were 70 years remaining we calculated the premium to the landlord for the lease extension to be between £10,500 and £12,000 exclusive of fees.