Unfortunately that a Potton residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is taken for granted in the first few years due to the depreciation being disguised by increases in the Potton property prices.Once your lease gets to 85ish years, you should start considering 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 falls under 80 years - otherwise a higher amount will be payable. Most leasehold owners in Potton will be able to extend under the legislation; however a conveyancer should be able to confirm if you qualify for an extension. In some cases you may not qualify. There are also strict timeframes and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancing solicitor for the duration of the formalities.
It is conventional wisdom that a property with more than 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to any lease with more than 35 years left, the premises will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| 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; |
| Chelsea 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. |
| Leeds Building Society | 85 years remaining from the start 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Using our service gives you better control over the value of your Potton leasehold, as your property will be more valuable and marketable in relation to the lease length should you decide 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 the wake of 9 months of protracted negotiations with the landlord of her purpose-built apartment in Potton, Catherine commenced the lease extension process as the eighty year mark was rapidly nearing. The lease extension was concluded in November 2007. The landlord’s charges were kept to an absolute minimum.
Last Christmas we were contacted by Ms U Rogers , who took over the lease of a ground floor apartment in Potton in November 2008. The dilemma was if we could estimate the premium would be to prolong the lease by ninety years. Comparable premises in Potton with a long lease were worth £275,000. The mid-range ground rent payable was £45 collected yearly. The lease concluded in 2094. Taking into account 69 years remaining we calculated the compensation to the freeholder to extend the lease to be within £12,400 and £14,200 plus legals.
Last Spring we were approach by Mrs Ellie Sánchez , who took over the lease of a studio flat in Potton in November 2007. We are asked if we could shed any light on how much (roughly) premium could be for a ninety year lease extension. Similar flats in Potton with a long lease were worth £216,000. The average ground rent payable was £60 collected every twelve months. The lease ran out on 1 November 2083. Having 58 years left we estimated the premium to the landlord to extend the lease to be within £28,500 and £33,000 plus legals.