Unfortunately that a Penzance 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 first few years due to the reduction being disguised by increases in the Penzance property prices.Where your lease has approximately ninety years left, you should start considering a lease extension. If the number of years remaining slips under eighty years, you will then be required to pay half 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 Penzance will be able to extend under the legislation; however a conveyancing solicitor will be able to clarify whether you qualify for an extension. In some cases you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process is instigated and you will need to be guided by your conveyancer throughout the formalities.
It is conventional wisdom that a residential leasehold with over one hundred years remaining is worth roughly the same as a freehold. Where an additional ninety years added to any lease with more than 45 years left, the property will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| Lloyds TSB Scotland | 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. |
| 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 handle Penzance 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 lawyer we work with provide it.
Off the back of unsuccessful discussions with the landlord of her one bedroom flat in Penzance, Victoria started the lease extension process just as her lease was nearing the all-important eighty-year deadline. The transaction was concluded in March 2015. The freeholder’s costs were kept to an absolute minimum.
In 2011 we were called by Mr and Mrs. C Simon who, having was assigned a lease of a one bedroom apartment in Penzance in January 1998. The dilemma was if we could estimate the compensation to the landlord would be to extend the lease by ninety years. Identical residencies in Penzance with a long lease were worth £280,000. The average ground rent payable was £55 billed every twelve months. The lease ran out on 25 October 2104. Taking into account 79 years left we approximated the premium to the landlord to extend the lease to be between £13,300 and £15,400 exclusive of costs.
In 2014 we were phoned by Dr A Lefebvre who, having completed a studio flat in Penzance in January 2007. We are asked if we could estimate the price would likely be to extend the lease by a further 90 years. Comparative residencies in Penzance with an extended lease were valued about £191,000. The mid-range ground rent payable was £65 invoiced annually. The lease terminated on 3 February 2083. Given that there were 58 years left we calculated the premium to the landlord to extend the lease to be within £23,800 and £27,400 not including fees.