Owning a flat usually means owning a lease of the property, which has a set term of years. The lease will ordinarily be granted for a fixed period of time , ordinarily 99 or 125 years, although we have seen longer and shorter terms in Penrith. Clearly, the period of lease left reduces as time goes by. This is often ignored and only becomes a problem when the property has to be disposed of or refinanced. The shorter the lease the less it is worth and the more it will cost to obtain a lease extension. Qualifying long lease owners in Penrith have the legal entitlement to extend the lease for a further 90 years under statute. Please give due attention before delaying your Penrith lease extension. Holding off the cost now simply increases the price you will ultimately have to pay for a lease extension
It is generally considered that a property with over 100 years unexpired lease term is worth roughly the same as a freehold. Where an further 90 years added to any lease with more than 45 years unexpired, the property will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. Leases with fewer than 70 years should only be referred to the issuing office where the following scenario applies, as discretion may be applied subject to bank approval: • Property is located in any of the following prestigious developments: Cadogan, Crown, Grosvenor, Howard de Walden, Portman or Wellcome Trust Estates in Central London AND • The value of the property subject to the short remaining term is £500,000 or more AND • The loan to value does not exceed 90% for purchases, 90% like for like re-mortgages, 80% for re-mortgages with any element of capital raising and 80% for existing Barclays mortgage borrowers applying for additional borrowing; |
| 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 |
| 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 conveyancing solicitors that we work with handle Penrith 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.
Last year Ibrahim, started to get close to the eighty-year threshold with the lease on his ground floor apartment in Penrith. Having bought his home 19 years previously, the length of the lease was of minimal importance. As luck would have it, he recognised he would imminently be paying way over the odds for a lease extension. Ibrahim arranged for a lease extension just ahead of time last May. Ibrahim and the landlord subsequently agreed on an amount of £5,000 . If he failed to meet the deadline, the sum would have escalated by at least £950.
Mr and Mrs. V Dupont acquired a ground floor flat in Penrith in April 2005. The question was if we could approximate the price would likely be for a ninety year extension to my lease. Comparative residencies in Penrith with an extended lease were worth £166,800. The average amount of ground rent was £50 invoiced every twelve months. The lease came to a finish in 2076. Considering the 50 years as a residual term we estimated the premium to the landlord to extend the lease to be between £32,300 and £37,400 exclusive of costs.
Last year we were called by Mr and Mrs. O David , who purchased a ground floor flat in Penrith in May 2002. We are asked if we could approximate the premium could be to extend the lease by 90 years. Identical premises in Penrith with a long lease were in the region of £280,000. The average ground rent payable was £45 invoiced annually. The lease finished on 19 February 2096. Given that there were 70 years as a residual term we approximated the premium to the landlord to extend the lease to be between £12,400 and £14,200 exclusive of expenses.