Top reasons for Pencoed lease extension
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<h3> Top reasons for lease extension now:
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<h4> A <a href="http://www.lendermonitor.com/conveyancing/loc/pencoed">Pencoed</a> leasehold property depreciates with the years remaining on the lease.
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<p> Unfortunately that a Pencoed residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is taken for granted in the early years due to the reduction being disguised by increases in the Pencoed property market.Once your lease nears 85ish years, you need to start considering a lease extension. If the number of years remaining drops under 80 years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of extra value that a lease extension will add the property The majority of leasehold owners in Pencoed will be able to extend under the legislation; however a conveyancing solicitor 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 follow once the process is initiated and you will need to be guided by your lawyer for the duration of the formalities.
<h4>An extended lease has roughly the same value as a freehold</h4>
<p> It is conventional wisdom that a property with in excess of one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years ahead.
<h4>Banks and Building Societies may decide not to finance a property with a short lease</h4>
The trend since 2008 has been for lenders to tighten lending criteria across the board - this has extended to the types of security over which the home loan is to be charged. This has resulted in the unexpired lease term required by lenders has increased. Historically lenders would grant a mortgage on a lease with twenty years plus the term of the loan - typically 50 year leases but those requirements evolved by the requirement for lengthy leases - many now have a minimum term of 75 years as standard.
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<td>Accord Mortgages</td>
<td> 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.
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<td>Coventry Building Society</td>
<td> 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.
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<td>National Westminster Bank</td>
<td> Mortgage term plus 30 years.<br /><br />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.
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<td>Nationwide Building Society</td>
<td> - Our minimum unexpired lease term is 55 years, except where lending is over 85% of the purchase price/valuation on a second hand flat, in which case our minimum unexpired term is 90 years. <br />- There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start).<br /><br />Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:<br /><br />Second hand property:<br />- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years <br />- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported<br />- For equity share applications - advise us if the actual lease term is different than reported on the offer<br />- Where lending is over 85% of the purchase price/valuation on a second hand flat and the unexpired lease term on the offer is 90 years or more - only advise us if the actual lease term is less than 90 years. <br /><br />New build property:<br />- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)<br />- For equity share applications - always advise us if the actual lease term is different than reported on the offer<br /><br />Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.<br /><br />SECOND HAND PROPERTIES<br /><br />Unacceptable - advise Issuing Office (Will be declined):<br />- Unexpired lease term less than 55 years<br />- Unexpired lease term less than 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat<br />- Less than 30 years remaining at the end of the mortgage term<br />- Ground Rent greater than 0.5% of the property value<br />- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more<br />- Ground Rent is compounded RPI<br />- Ground Rent review period is less than or equal to 5 years<br /><br />Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):<br />- Unexpired lease term is 55 to 85 years<br />- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value<br />- Ground Rent escalation is linked to any indices greater than RPI<br />- Ground Rent escalation is linked to the value of the building*<br />- Ground Rent review period is greater than 5 and less than 10 years<br />- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial, etc<br />- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)<br />- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)<br />- Anything that appears onerous, unusual or out of the ordinary<br /><br />Acceptable (no requirement to advise Issuing Office):<br />- Unexpired lease term greater than 85 years (Minimum 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat)<br />- Ground Rent less than or equal to 0.1% of the property value<br />- Ground Rent review period greater than or equal to 10 years<br />- Ground Rent escalation less than or equal to RPI<br /><br />NEW BUILD PROPERTIES (includes office conversions)<br /><br />Unacceptable - advise Issuing Office (Will be declined)<br />- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house (does not apply to Shared Ownership)<br />- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis<br />- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis<br /><br />Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):<br />- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc<br />- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)<br />- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)<br />- Anything else appears onerous, unusual or out of the ordinary<br /><br />Acceptable (no requirement to advise Issuing Office):<br />- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house<br />- A lease subject to a peppercorn Ground Rent (Annual Rent) charges<br /><br />For the avoidance of doubt, any New Build properties completed but not sold pre-30 June 2022 will only be acceptable if the Lease conforms to the above guidance. <br /><br />* Where the Ground Rent escalation is linked to the value of the building, please provide the following:<br />- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?<br />- The current valuation and Ground Rent for each unit<br />- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?<br />- What is the right of appeal? And is this a documented process within the lease?<br />- Who bears the cost of the valuation (and appeal) process?<br />- Confirmation the review period is not less than twenty years.<br /><br />Lease Extensions<br /><br />We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to Issuing Office. <br /><br />Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning.
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<td>Yorkshire Building Society</td>
<td> 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.
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What makes us experts in Pencoed lease extensions?
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<p> Regardless of whether you are a tenant or a landlord in Pencoed,the lease extension lawyers that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Pencoed valuers.
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Pencoed Lease Extension Example Cases:
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<h5> Chantelle, Pencoed, Bridgend,</h5>
<p> After unsuccessful negotiations with the landlord of her two bedroom flat in Pencoed, Chantelle initiated the lease extension process just as the lease was nearing the crucial eighty-year threshold. The legal work was concluded in July 2011. The freeholder’s costs were kept to an absolute minimum.
<h5>Pencoed case:</h5>
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Last month we were e-mailed by Mr and Mrs. O Turner , who
took over the lease of a one bedroom apartment in Pencoed in February 2004. We are asked if we could approximate the premium would be for a ninety year lease extension. Similar flats in Pencoed with a long lease were worth £249,200. The average ground rent payable was £60 billed quarterly. The lease lapsed on 16 November 2077. Given that there were 51 years left we calculated the premium to the freeholder to extend the lease to be between £42,800 and £49,400 plus costs.
<h5>Pencoed case:</h5>
<p> Mr Finley Johnson was assigned a lease of a first floor apartment in Pencoed in January 2001. We are asked if we could approximate the premium would be to prolong the lease by 90 years. Comparative flats in Pencoed with an extended lease were valued about £210,600. The average ground rent payable was £45 billed monthly. The lease lapsed on 12 February 2088. Having 62 years left we calculated the premium to the landlord for the lease extension to be within £18,100 and £20,800 plus expenses.
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