The market value of a leasehold property in Penarth is impacted by how many years the lease has remaining. If it is close to or fewer than 80 years you should envisage problems on re-sale, so it is advisable to arrange for a lease extension prior to buying. It is preferable to start the process of extending the lease is when a lease still has 82 years remaining so that a lease extension can be addressed ahead of the 80 year cut off point. Statute enables Penarth qualifying lessees to acquire a new lease which will be for the balance of the existing lease plus a supplemental term of 90 years. The purpose of the valuation is to determine the premium payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold premises in Penarth with in excess of one hundred years outstanding on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such circumstances there is often little to be gained by purchasing the freehold unless savings on ground rent and estate charges justify 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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 handle Penarth 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 lawyer we work with provide it.
Edward owned a high value apartment in Penarth being sold with a lease of fraction over 59 years left. Edward on an informal basis approached his landlord a well known London-based freehold company for a lease extension. The freeholder indicated a willingness to extend the lease to 125 years subject to a new rent initially set at £100 per annum and doubled every twenty five years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Edward to exercise his statutory right. Edward procured expert legal guidance and secured an acceptable resolution informally and ending up with a market value flat.
In 2010 we were e-mailed by Dr B Petit who, having owned a one bedroom flat in Penarth in May 2005. The dilemma was if we could approximate the compensation to the landlord could be for a 90 year lease extension. Comparative properties in Penarth with an extended lease were in the region of £200,000. The average ground rent payable was £50 billed annually. The lease ended in 2102. Having 77 years outstanding we approximated the compensation to the freeholder to extend the lease to be between £8,600 and £9,800 plus fees.
Dr D Sharif moved into a purpose-built flat in Penarth in March 2007. The question was if we could estimate the premium could be for a ninety year extension to my lease. Comparable residencies in Penarth with an extended lease were valued about £260,200. The average amount of ground rent was £65 collected monthly. The lease elapsed on 6 January 2091. Given that there were 66 years outstanding we estimated the premium to the landlord for the lease extension to be between £15,200 and £17,600 plus fees.