Unfortunately that a Pentyrch residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the deflation being disguised by increases in the Pentyrch property market.Once your lease gets to 85ish years, you need to start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease dips below 80 years - otherwise a higher premium will be payable. The majority of flat owners in Pentyrch will be able to extend under the legislation; however a conveyancer will be able to confirm whether you qualify for an extension. 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 conveyancer from beginning to end of the process.
It is conventional wisdom that a residential leasehold with over one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| Chelsea 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. |
| 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. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Engaging our service gives you enhanced control over the value of your Pentyrch leasehold, as your property will be more valuable and saleable in terms of lease length should you want to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Half a year ago Jamie, came seriously close to the 80-year mark with the lease on his ground floor flat in Pentyrch. In buying his home two decades ago, the length of the lease was of no bearing. by good luck, it dawned on him that he needed to take steps soon on Extending the lease. Jamie arranged for a lease extension just under the wire last January. Jamie and the landlord ultimately agreed on the final figure of £5,000 . If the lease had descended to less than 80 years, the price would have increased by at least £1,025.
Mr R Jackson completed a recently refurbished flat in Pentyrch in November 1995. The question was if we could approximate the compensation to the landlord would likely be to prolong the lease by a further 90 years. Comparative properties in Pentyrch with a long lease were valued about £173,800. The average ground rent payable was £60 collected yearly. The lease finished on 7 June 2080. Taking into account 55 years remaining we approximated the premium to the freeholder to extend the lease to be within £31,400 and £36,200 exclusive of fees.
Mrs Naomi Miller purchased a one bedroom flat in Pentyrch in February 1996. We are asked if we could approximate the premium would be to extend the lease by 90 years. Identical properties in Pentyrch with a long lease were worth £235,200. The mid-range ground rent payable was £45 billed quarterly. The lease expiry date was on 24 November 2091. Taking into account 66 years remaining we calculated the compensation to the freeholder to extend the lease to be between £12,400 and £14,200 not including fees.