It’s a harsh truth that a Penn 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 Penn property market.Once your lease nears 85ish years, you should start thinking about a lease extension. If lease term drops below eighty 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. Marriage value is the amount of extra value that a lease extension will add the property Most leasehold owners in Penn will be able to extend under the legislation; however a conveyancer should be able to clarify if you are eligibility. In some situations you may not qualify. There are also strict deadlines and procedures to follow once the process is initiated and you will need to be guided by your conveyancing solicitor throughout the formalities.
It is generally considered that a property with over 100 years remaining is worth approximately the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the residence will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Coventry Building Society | 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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. |
Using our service gives you better control over the value of your Penn leasehold, as your property will be more valuable and saleable in terms of lease length should you wish 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.
Omar owned a studio apartment in Penn on the market with a lease of fraction over 61 years left. Omar informally spoke with his freeholder a well known London-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to extend the lease to 125 years on the basis of a new rent to start with set at £100 per annum and increase every 25 years thereafter. Ordinarily, ground rent would not be due on a lease extension were Omar to invoke his statutory right. Omar procured expert legal guidance and was able to make a more informed judgement and deal with the matter and sell the flat.
Last year we were contacted by Mrs Ellie Mason , who owned a newly refurbished apartment in Penn in August 1995. We are asked if we could estimate the price would likely be for a 90 year lease extension. Comparable properties in Penn with an extended lease were valued about £248,000. The average amount of ground rent was £65 collected every twelve months. The lease came to a finish in 2088. Considering the 63 years as a residual term we estimated the premium to the freeholder for the lease extension to be between £20,000 and £23,000 exclusive of fees.
Mr and Mrs. T Hill acquired a studio flat in Penn in April 2000. We are asked if we could shed any light on how much (approximately) compensation to the landlord could be to extend the lease by 90 years. Identical flats in Penn with a long lease were worth £181,600. The mid-range ground rent payable was £55 billed quarterly. The lease came to a finish in 2077. Having 52 years as a residual term we estimated the premium to the freeholder to extend the lease to be between £30,400 and £35,200 exclusive of professional charges.