Owning a flat usually means owning a lease of the property, which has a finite term of years. This lease will normally be granted for a prescribed period of time , ordinarily 99 or 125 years, although we have witnessed longer and shorter terms in Penn. Clearly, the length of lease remaining shortens as time goes by. This may slip by relatively unnoticed when the property needs to be disposed of or refinanced. The fewer the years remaining the less it is worth and the more it will cost to extend the lease. Qualifying long lease owners in Penn have the right to extend the lease for an additional ninety years in accordance with Leasehold Reform legislation. Please give careful consideration before putting off your Penn lease extension. Holding off that expense now only increases the price you will eventually have to pay for a lease extension
It is conventional wisdom that a residential leasehold with more than 100 years remaining is worth approximately the equivalent as a freehold. Where an additional ninety years added to any lease with more than 45 years left, the residence will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Halifax | 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with undertake Penn 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 conveyancer we work with provide it.
Zachary owned a conversion flat in Penn being sold with a lease of fraction over fifty eight years remaining. Zachary on an informal basis approached his freeholder being a well known local-based freehold company for a lease extension. The freeholder indicated a willingness to grant an extension taking the lease to 125 years subject to a rise in the rent to £50 per annum. No ground rent would be due on a lease extension were Zachary to exercise his statutory right. Zachary procured expert legal guidance and was able to make a more informed decision and deal with the matter and sell the flat.
In 2014 we were contacted by Mr and Mrs. I Allen who, having was assigned a lease of a purpose-built flat in Penn in September 2001. The dilemma was if we could shed any light on how much (approximately) price could be to prolong the lease by a further 90 years. Comparative residencies in Penn with an extended lease were valued about £210,000. The average ground rent payable was £50 collected yearly. The lease lapsed in 2106. Given that there were 80 years unexpired we calculated the premium to the landlord for the lease extension to be within £8,600 and £9,800 not including expenses.
Last Winter we were approach by Dr F Mason , who moved into a garden flat in Penn in April 2010. The dilemma was if we could estimate the price would likely be to prolong the lease by 90 years. Comparative flats in Penn with an extended lease were in the region of £280,000. The average ground rent payable was £45 billed per annum. The lease ended on 14 November 2095. Having 69 years remaining we calculated the compensation to the freeholder for the lease extension to be between £12,400 and £14,200 plus expenses.