Unfortunately that a Penylan residential lease is a deteriorating 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 depreciation being disguised by increases in the Penylan property prices.Where your lease has approximately ninety years left, 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 slips lower than 80 years - otherwise a higher premium will be due. The majority of leasehold owners in Penylan will be able to extend under the legislation; however a conveyancing solicitor should be able to confirm if you are eligibility. In some situations you may not be entitled. There are also strict timetables and procedures to follow once the process has commenced and you will need to be guided by your conveyancer from beginning to end of the formalities.
It is conventional wisdom that a property with over 100 years remaining is worth roughly the same as a freehold. Where an additional 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 |
|---|---|
| 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. |
| 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. |
| 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. |
Retaining our service will provide you increased control over the value of your Penylan leasehold, as your property will be more valuable and marketable in terms of lease length should you wish to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
In 2014 Max, started to get close to the eighty-year threshold with the lease on his first floor flat in Penylan. Having bought his flat two decades ago, the unexpired term was of no interest. Fortunately, it dawned on him that he would soon be paying an escalated premium for a lease extension. Max extended the lease just under the wire last April. Max and the freeholder in the end settled on the final figure of £5,000 . If he had missed the deadline, the figure would have become more exhorbitant by a minimum £1,000.
Last month we were phoned by Mr Edward Green , who bought a first floor apartment in Penylan in March 2006. We are asked if we could estimate the premium would likely be to extend the lease by a further 90 years. Comparative premises in Penylan with a long lease were valued about £295,000. The mid-range ground rent payable was £45 invoiced monthly. The lease terminated in 2099. Taking into account 74 years as a residual term we approximated the premium to the freeholder to extend the lease to be within £8,600 and £9,800 plus legals.
In 2012 we were called by Mr R Parker who, having moved into a one bedroom apartment in Penylan in February 2008. The dilemma was if we could approximate the compensation to the landlord would be to prolong the lease by an additional years. Comparable homes in Penylan with an extended lease were in the region of £248,000. The mid-range ground rent payable was £65 invoiced quarterly. The lease elapsed in 2088. Given that there were 63 years outstanding we estimated the premium to the landlord for the lease extension to be between £20,900 and £24,200 exclusive of professional charges.