Peterlee Lease Extension - Free Consultation

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Why you should commence your Peterlee lease extension


Top reasons for lease extension now:

Increase your lease and increase your Peterlee property value

The market value of Peterlee leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of a lease extension can increase substantially once the remaining term is less than 80 years

Peterlee property with a lease extension is almost the same value as a freehold

Leasehold residencies in Peterlee with in excess of 100 years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and maintenance charges warrant it.

Lending institutions may not issue a mortgage on a short lease

Mortgage lenders have set criteria when lending funds charged on leasehold homes. Some will simply refrain from lending at all once an unexpired lease term slips beneath a specified unexpired lease term. Many Banks and Building Societies will not regard property with a remaining term of less than seventy years as acceptable security. In addition to this being important when selling, it is also relevant if you are wanting to refinance your Peterlee home.

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.
Birmingham Midshires Minimum 70 years from the date of the mortgage.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges

For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years

LEASE EXTENSIONS

We require all lease extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to the Issuing Office
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.

Get in touch with one of our Peterlee lease extension solicitors or enfranchisement solicitors

Irrespective of whether you are a tenant or a landlord in Peterlee,the lease extension solicitors that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Peterlee valuers.

Peterlee Lease Extension Case Studies:

Jamie, Peterlee, County Durham

In recent months Jamie, started to get near to the 80-year threshold with the lease on his first floor apartment in Peterlee. In buying his home 18 years ago, the unexpired term was of minimal relevance. As luck would have it, he became aware that he needed to take action soon on Extending the lease. Jamie extended the lease at the eleventh hour in April. Jamie and the freeholder via the management company ultimately settled on the final figure of £5,500 . If he failed to meet the deadline, the sum would have increased by at least £1,100.

Peterlee case:

Mrs V François moved into a garden apartment in Peterlee in August 2007. We are asked if we could estimate the premium would likely be to extend the lease by an additional years. Identical properties in Peterlee with a long lease were worth £254,200. The mid-range ground rent payable was £60 collected annually. The lease ran out on 14 March 2075. Taking into account 51 years as a residual term we estimated the compensation to the landlord for the lease extension to be between £43,700 and £50,600 exclusive of expenses.

Peterlee case:

In 2012 we were contacted by Mrs Ellen Adams who, having owned a ground floor flat in Peterlee in October 2002. We are asked if we could shed any light on how much (roughly) price would be to extend the lease by an additional years. Comparative properties in Peterlee with a long lease were in the region of £215,600. The mid-range ground rent payable was £45 collected annually. The lease ended on 24 April 2086. Considering the 62 years unexpired we estimated the premium to the freeholder for the lease extension to be between £18,100 and £20,800 not including expenses.