The market value of a leasehold property in Penley is impacted by how many years the lease has left to run. If it is near to or less than 80 years you should foresee problems on re-sale, so it is recommended to arrange for the lease to be extended ahead of buying. It is preferable to commence the lease extension process when the lease still has 82 years remaining so that formalities can be finalised prior to the eighty year cut off point. Current legislation entitles Penley qualifying lessees to acquire a new lease which will be for the current unexpired lease term plus a further term of ninety years. The purpose of the valuation is to determine the sum payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold properties in Penley with over 100 years unexpired on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and maintenance charges merit it.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start 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. |
The lawyers that we work with handle Penley 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.
After protracted discussions with the landlord of her ground floor apartment in Penley, Sarah initiated the lease extension process just as the lease was nearing the all-important 80-year threshold. The transaction was finalised in August 2005. The freeholder’s charges were negotiated to a tad over 550 pounds.
In 2009 we were e-mailed by Dr C Laurent who, having purchased a first floor flat in Penley in May 1996. The dilemma was if we could estimate the premium would be for a 90 year lease extension. Comparative homes in Penley with 100 year plus lease were worth £255,000. The average amount of ground rent was £50 invoiced yearly. The lease finished in 2097. Taking into account 71 years left we estimated the compensation to the freeholder for the lease extension to be within £9,500 and £11,000 plus professional charges.
Dr Kai Norbert completed a studio flat in Penley in February 1998. We are asked if we could shed any light on how much (approximately) compensation to the landlord could be to extend the lease by a further 90 years. Comparative properties in Penley with an extended lease were in the region of £254,200. The mid-range amount of ground rent was £60 collected yearly. The lease finished on 26 March 2077. Given that there were 51 years remaining we approximated the premium to the landlord to extend the lease to be between £43,700 and £50,600 not including professional charges.