It’s an underpublicised truth that a Penn residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the first few years due to the reduction being disguised by increases in the Penn property market.Once your lease nears 85ish years, you need to start thinking about a lease extension. If the number of years remaining drops below eighty years, you will then be required to pay 50% of the property's 'marriage value' on top of 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 Most flat owners in Penn will be able to extend under the legislation; however a conveyancing solicitor should be able to clarify if you qualify for an extension. In some cases you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process is initiated and you will need to be guided by your lawyer throughout the process.
Leasehold premises in Penn with over 100 years remaining on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset 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 |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| Yorkshire 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. |
The lawyers that we work with procure 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.
Trailing protracted negotiations with the freeholder of her ground floor apartment in Penn, Jennifer commenced the lease extension process as the eighty year mark was fast approaching. The transaction was concluded in January 2014. The landlord’s costs were kept to an absolute minimum.
Last Autumn we were e-mailed by Dr Matthew Sánchez , who completed a garden apartment in Penn in June 2009. The question was if we could approximate the price could be for a ninety year extension to my lease. Similar flats in Penn with an extended lease were valued around £233,200. The mid-range ground rent payable was £60 invoiced yearly. The lease ended on 10 July 2087. Taking into account 61 years as a residual term we estimated the compensation to the freeholder for the lease extension to be within £22,800 and £26,400 not including professional charges.
Ms K Brooks moved into a one bedroom apartment in Penn in April 2008. The question was if we could approximate the compensation to the landlord would likely be for a 90 year lease extension. Comparable homes in Penn with 100 year plus lease were in the region of £171,800. The mid-range amount of ground rent was £55 billed every twelve months. The lease ended on 28 May 2076. Given that there were 50 years outstanding we estimated the premium to the landlord to extend the lease to be between £32,300 and £37,400 exclusive of expenses.