For anyone whose Penkridge flat is held on a long lease, the message is clear – if you do nothing, your property will eventually revert to the freeholder, leaving you empty-handed. The fewer the years remaining the lower the value of the property and the more it will cost to obtain a lease extension.
It is conventional wisdom that a residential leasehold with in excess of one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional ninety years added to any lease with more than 30 years left, the premises will be equivalent in value to a freehold for decades to come.
| Lender | Requirement |
|---|---|
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Engaging our service will provide you increased control over the value of your Penkridge leasehold, as your property will be more valuable and marketable in relation to the lease length should you decide to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
In recent months Jacob, started to get near to the 80-year threshold with the lease on his studio flat in Penkridge. Having purchased his flat two decades ago, the lease term was of minimal concern. As luck would have it, he became aware that he would soon be paying an escalated premium for a lease extension. Jacob arranged for a lease extension just under the wire in August. Jacob and the freeholder eventually settled on the final figure of £6,000 . If he failed to meet the deadline, the price would have increased by at least £1,075.
In 2010 we were phoned by Mr and Mrs. D Taylor who, having acquired a garden flat in Penkridge in October 1997. We are asked if we could approximate the premium could be to extend the lease by a further 90 years. Similar residencies in Penkridge with an extended lease were in the region of £171,800. The average ground rent payable was £55 billed per annum. The lease expired in 2076. Considering the 50 years outstanding we calculated the premium to the landlord to extend the lease to be between £33,300 and £38,400 plus costs.
In 2012 we were called by Mr and Mrs. F Martinez who, having took over the lease of a one bedroom flat in Penkridge in April 1997. The dilemma was if we could estimate the price would likely be for a ninety year extension to my lease. Identical homes in Penkridge with 100 year plus lease were worth £280,000. The mid-range amount of ground rent was £45 collected every twelve months. The lease elapsed in 2096. Given that there were 70 years unexpired we approximated the compensation to the freeholder to extend the lease to be within £12,400 and £14,200 plus expenses.