Owning a apartment usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. The lease will ordinarily be granted for a prescribed period of time , usually 99 or 125 years, although we have witnessed longer and shorter terms in Polesworth. Clearly, the term of lease left shortens over time. This is often ignored and only raises itself as an issue when the property has to be sold or refinanced. The shorter the lease the less it is worth and the more it will cost to obtain a lease extension. Eligible long lease owners in Polesworth have the legal entitlement to extend the lease for a further ninety years in accordance with the 1993 Leasehold Reform Act. Please give careful consideration before delaying your Polesworth lease extension. Holding off the cost now likely increases the price you will eventually incur for a lease extension
Leasehold premises in Polesworth with in excess of 100 years outstanding on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and maintenance charges merit 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Godiva Mortgages | 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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 enhanced control over the value of your Polesworth leasehold, as your property will be more valuable and marketable in respect of lease length should you wish to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
In recent months Harry, started to get near to the 80-year threshold with the lease on his studio flat in Polesworth. Having bought his property 19 years previously, the length of the lease was of no relevance. Thankfully, he realised he would soon be paying way over the odds for Extending the lease. Harry was able to extend his lease just in the nick of time last April. Harry and the freeholder subsequently agreed on sum of £5,000 . If the lease had slid to less than eighty years, the amount would have increased by a minimum £1,100.
Last month we were called by Dr Eleanor López , who took over the lease of a first floor apartment in Polesworth in March 2000. The dilemma was if we could estimate the price would likely be for a 90 year extension to my lease. Identical homes in Polesworth with a long lease were worth £285,000. The average amount of ground rent was £45 collected annually. The lease terminated in 2098. Taking into account 72 years outstanding we calculated the compensation to the freeholder to extend the lease to be between £12,400 and £14,200 plus costs.
Last May we were e-mailed by Mr and Mrs. H Jones , who purchased a newly refurbished flat in Polesworth in November 1999. The question was if we could approximate the premium would be to prolong the lease by an additional years. Comparable homes in Polesworth with an extended lease were worth £233,200. The mid-range amount of ground rent was £60 collected yearly. The lease expired on 19 November 2087. Given that there were 61 years as a residual term we estimated the compensation to the freeholder for the lease extension to be between £22,800 and £26,400 plus legals.