Owning a apartment usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. The lease will usually be granted for a fixed period of time , usually 99 or 125 years, although we have seen longer and shorter terms in Pitstone. Clearly, the period of lease remaining shortens over time. This may slip by relatively unnoticed when the flat or house needs to be disposed of or re-mortgaged. The fewer the years remaining the less it is worth and the more expensive it will be to extend the lease. Qualifying long lease owners in Pitstone have the right to extend the lease for a further ninety years under the 1993 Leasehold Reform Act. You should give careful attention before putting off your Pitstone lease extension. Holding off that expense now likely increases the price you will ultimately incur for a lease extension
Leasehold properties in Pitstone with more than 100 years outstanding on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such circumstances there is often little upside in buying the reversionary interest unless savings on ground rent and estate charges justify it.
| Lender | Requirement |
|---|---|
| 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; |
| 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 | If the property is leasehold, the remaining unexpired lease term at the end of the new mortgage term must be at least 50 years where any part of the mortgage is on Interest Only and 30 years if all loan parts are on Capital Repayment and Interest. You must report the unexpired lease term to us and await our instructions if:
|
| 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. |
The conveyancers that we work with undertake Pitstone 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 conveyancing solicitor we work with provide it.
Rory was the the leasehold owner of a conversion apartment in Pitstone being sold with a lease of just over 61 years left. Rory on an informal basis spoke with his landlord a well known local-based freehold company and enquired on a premium to extend the lease. The landlord was keen to agree an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent at the outset set at £150 per annum and increase every twenty five years thereafter. No ground rent would be payable on a lease extension were Rory to invoke his statutory right. Rory obtained expert legal guidance and was able to make a more informed judgement and handle with the matter and readily saleable.
Last year we were called by Dr Muhammad Johnson , who owned a one bedroom apartment in Pitstone in October 2005. We are asked if we could approximate the price could be to prolong the lease by a further 90 years. Comparative premises in Pitstone with 100 year plus lease were valued around £280,000. The mid-range amount of ground rent was £55 invoiced annually. The lease ran out in 2104. Given that there were 78 years remaining we estimated the premium to the landlord for the lease extension to be between £13,300 and £15,400 not including legals.
Last Summer we were called by Dr Stanley Dupont , who completed a purpose-built flat in Pitstone in August 1997. We are asked if we could estimate the compensation to the landlord would be to extend the lease by 90 years. Comparable flats in Pitstone with 100 year plus lease were valued around £191,000. The average ground rent payable was £65 invoiced per annum. The lease end date was in 2084. Considering the 58 years as a residual term we calculated the premium to the freeholder for the lease extension to be within £23,800 and £27,400 exclusive of fees.